Navarre Minerals
Annual Report 2015

Plain-text annual report

NAVARRE MINERALS LIMITED ABN 66 125 140 105 Annual Report 2015 Navarre Minerals Limited ABN 66 125 140 105 Corporate Directory Contents Company Navarre Minerals Limited ABN 66 125 140 105 and subsidiary: Black Range Metals Pty Ltd ABN 31 158 123 687 Directors Kevin Wilson (Chairman) Geoff McDermott (Managing Director) John Dorward Colin Naylor Company Secretary Jane Nosworthy Registered Office & Principal Operations Office 40-44 Wimmera Street PO Box 385 Stawell Victoria 3380 Australia Telephone +61 (3) 5358 8625 Email info@navarre.com.au Website www.navarre.com.au Share Registrar Boardroom Pty Limited Level 7, 207 Kent Street Sydney NSW 2000 Australia Telephone +61 (2) 9290 9600 +61 (3) 9279 0664 Facsimile Auditor RSM Bird Cameron Partners Level 21 55 Collins Street Melbourne Victoria 3000 Australia Stock Exchange Listing ASX Limited Level 4, North Tower, Rialto 525 Collins Street Melbourne Victoria 3000 Australia ASX Code: NML Incorporated 30 April 2007 Victoria, Australia Chairman’s Report Managing Director’s Review of Operations Directors’ Report Auditor’s Independence Declaration Remuneration Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Review Report Additional Shareholder Information 2 3 9 17 18 29 30 31 32 33 53 54 56 FORWARD LOOKING STATEMENTS about that have been based on This Financial Report includes certain forward-looking current statements expectations and future circumstances. These forward-looking statements are, however, subject to risks, uncertainties and assumptions that could cause those acts, events and circumstances to differ materially from the expectations described in such forward-looking statements. events acts, These factors include, among other things, commercial and other risks associated with the meeting of objectives and other investment considerations, as well as other matters not yet known to the Company or not currently considered material by the Company. 1 Navarre Minerals Limited ABN 66 125 140 105 CHAIRMAN’S REPORT Dear Fellow Shareholder, On behalf of the Directors, it is my pleasure to present Navarre Minerals Limited’s Annual Report for the year ending 30 June 2015. It has been a year which has again seen many challenges for the resources sector on the back of a slowdown of economic activity in China. Financial conditions have been particularly tough for Australian junior exploration companies like Navarre. However, in spite of the difficult market conditions, your Company maintained an active field exploration program at its 100% owned Stawell Corridor Gold and Miga Arc Copper Projects, in Victoria. The review of operations, which follows my report, highlights the important achievements and milestones attained over the previous twelve months. These include two drilling programmes and the discovery of two new promising gold prospects near Ararat which form part of our Stawell Corridor Gold Project. The discovery of new prospects demonstrates your board’s pursuit for new exploration targets in Victoria, while the drilling programmes undertaken during the financial year demonstrate your board’s resolve to keep testing the existing prospects. The new prospects at Ararat have certain attributes that make them significantly less costly to explore: firstly they are near surface and secondly they are located only 15 kilometres from a fully permitted gold plant, owned and operated by Navarre’s largest shareholder, Newmarket Gold Inc. The Board believes that focusing on the Ararat gold prospects during 2015/16 has the potential to deliver significant shareholder value. The Directors will consider all possible means to fund the 2015/16 program including but not limited to a further injection of capital and/or securing a suitable farm-in partner. While activity on our other projects has been reduced, these remain valuable assets of the Company. Your Board’s view is that these projects remain a prospective ground holding that can best serve shareholder interests through third party involvement or monetisation. In recognition of the tough market conditions the Company joint ventured its north Bendigo Interests to Catalyst Metals Limited who are earning a 51% interest and we will continue to look at ways of advancing the other project tenements. Joint venturing more assets in the future may be necessary to maintain exploration activity unless market sentiment changes. Finally we continue to examine corporate level transactions that could elevate the Company’s ability to raise capital. On behalf of the Board I would like to thank our small management team for their strong performance during the year. Finally, I would like to thank all of you, our shareholders, for your support and encouragement over the past year, and in particular thank those who participated in the financing in the third quarter. We will do our utmost to reward this support in the year ahead. Kind regards Kevin Wilson Chairman 15 September 2015 2 Navarre Minerals Limited ABN 66 125 140 105 MANAGING DIRECTOR’S REVIEW OF OPERATIONS 2015 During the 2015 financial year, the Company advanced its strategy of maintaining a gold and copper commodity focus. The external economic conditions and the prevailing market sentiment towards resource companies has led Navarre to respond with a considered and methodical program of cost control while continuing to explore and advance its premier exploration assets. During the year the Company’s main activities were centred on (see Figure 1): 1. Gold – on the recently granted Stawell Corridor Gold project; and 2. Copper – the Eclipse, Lexington and Glenlyle prospects. Figure 1: Location of Navarre’s Victorian mineral projects. STAWELL CORRIDOR GOLD PROJECT (EL 5480 & EL 5476) The Stawell Corridor Gold Project, incorporating the Ararat and Tatyoon exploration licences and the historic Ararat Goldfield, is located between 10 and 70 kilometres south-east of the Stawell Gold Mine which is owned by Navarre’s largest shareholder and leading Victorian gold producer, Newmarket Gold Inc. (formerly Crocodile Gold Corp.) (see Figures 1 & 2). Approximately 6 million ounces of historic and modern gold production has occurred from Ararat and Stawell. The historic Ararat Goldfield is estimated to have produced approximately one million ounces of gold mainly from alluvial and deep lead production during the period 1854 to 1925. Production of primary hard-rock gold from the Ararat Goldfield was low given the richness of the alluvial deposits, and offers a compelling reason to search for economic primary gold mineralisation in the vicinity of the richest alluvial gold deposits. The largest gold mine along the Stawell Corridor is Stawell’s Magdala Gold Mine that is producing gold from a large multi- million ounce gold deposit that has been mined to depths in excess of 1,600m below surface (Figure 2). Modern gold mining of the Magdala deposit has been continuous since 1982 and has contributed more than 2.3 million ounces of the total 5 million ounces of gold production from the Stawell Goldfield. Gold mineralisation of the Stawell-type is located on the flanks of large basalt dome structures. The style of the gold mineralisation is much finer grained, more continuous and more predictable than the gold deposits typically found at Victoria’s largest two goldfields at Bendigo and Ballarat. 3 Navarre Minerals Limited ABN 66 125 140 105 Figure 2: Tilted satellite image looking north-west showing the location of the Irvine and Benno prospects relative to Stawell’s Magdala Gold Mine. Navarre believes the rocks of the Irvine and Benno prospects are the southern continuation of the Stawell mine rock package which hosts the multi-million ounce Magdala gold deposit. After the primary gold mineralisation event, the younger Devonian aged Stawell Granite has intruded (melted) its way through the Stawell mine sequence that now separates Magdala from Irvine and Benno. Ararat (EL 5476) New gold prospects on Ararat licence – Irvine and Benno Reconnaissance mapping and sampling on the recently granted Ararat exploration licence has delivered early success with the discovery of two significant gold prospects called Irvine and Benno only 15km south of Stawell’s Magdala Gold Mine. Rock chip samples from surface float and outcropping basalt-contact and quartz stockwork mineralisation are regularly grading at double-digit grams-per-tonne gold and have confirmed the existence of Stawell-style gold mineralisation occurring along at least 6 mineralised surfaces. Results to date show:    Surface rock chip samples containing moderate to high-grade gold mineralisation with gold tenor ranging from 0.1 to over 22 grams per tonne. New high-grade gold results from Irvine and Benno include 22.8 g/t, 19.3 g/t, 16.9 g/t, 14.8 g/t, 13.5 g/t and 11.0g/t (see ASX release 10 August 2015). Gold occurs along six main mineralised geological surfaces, ranging from approximately 300 metres to 1.6 kilometres in strike length (Figure 3). Evidence of primary gold mineralisation outcropping on the hill slopes in the headwaters to lines of drainage containing historic alluvial gold workings. The most productive mineralised surfaces mined at Stawell’s Magdala Mine (see Figure 2) are the rich gold lodes that occur along the basalt margins (“basalt contact zones”). Basalt contact zones have been identified during the recent mapping and sampling program at Irvine. A review of past exploration activity also revealed a single historic diamond drill hole that penetrated the basalt contact zone at the Irvine prospect. 4 Navarre Minerals Limited ABN 66 125 140 105 A 1994 drill hole, DD94AA254 (see Figure 3), passes through the western side of the Irvine basalt dome and is described by the previous explorer as intersecting a “classic” Magdala Mine footwall sequence containing zones of high pyrrhotite and arsenopyrite before ending in basalt. The drill hole results include an intercept of 0.5m @ 7.2 grams per tonne of gold on the basalt contact at 86.5 metres downhole (see ASX release 12 June 2015). The next steps are to undertake shallow sampling along each of the mineralised surfaces to identify potential shoots or zones of economic gold concentrations for drill testing. Figure 3: Prospect plan showing new rock chip sample locations, assay results and the 6 main mineralised surfaces. Tatyoon (EL 5480) Initial drill program completed at Grange gold prospect On 12 June 2015, the Company announced the results of its first pass drill program into the Grange basalt dome target (Figure 1). The drill program, comprising 6 RC and 3 diamond drill holes for a total of 1,500 metres, tested the main chargeability targets defined from induced polarisation (“IP”) geophysical surveys. These targets were detected in basement rocks hidden beneath cover rocks comprising recent volcanics, quartz gravels and sands. The drilling intersected broad zones of disseminated sulphide (pyrite and/or pyrrhotite) alteration and associated quartz veining within meta-sediments adjacent to the Grange basalt dome. This is interpreted to be of sufficient intensity and distribution to explain the IP chargeability response. 5 Navarre Minerals Limited ABN 66 125 140 105 The sulphide alteration located on the west flank of the dome appears to lack the intensity required to form economic mineralisation, where tested. The west flank basalt contact was also revealed to be complexly mixed with surrounding meta-sediments. In line with these observations, assay results returned from all holes which achieved target depths report minor gold mineralisation. The best result was 1m @ 1.18 g/t gold from 94m down-hole in RCT005 (see ASX release 12 June 2015). The results down-graded the prospectivity of the western side of the Grange basalt dome. Following completion of first pass drilling at Grange, the Company is appraising the Hermitage and Shiraz basalt domes as well as the east flank of the Grange dome. In conjunction with Monash University researchers, additional gravity surveying has been acquired and is being processed to refine the geometry and position of these basalt dome structures beneath the cover sequences. WESTERN VICTORIA COPPER PROJECT (ELs 4590, 5425, 5426 & 5497) Navarre’s 100%-owned Western Victoria Copper Project captures multiple, largely untested targets in 130km of Miga Arc volcanics (Figure 1), including the Eclipse, Lexington, Glenlyle and Pollockdale prospects. The Miga Arc is recognised as a continental margin arc setting similar to the Andes, host to the world’s largest known copper porphyry deposits. Navarre believes there is opportunity for large-scale porphyry copper, volcanic massive sulphide (VMS) and gold discoveries from within the Western Victoria Copper Project area, which includes drill-confirmed prospects from within our current list of more than 50 targets. Most areas across the Miga Arc are presently being geologically re-interpreted at a regional scale by the Geological Survey of Victoria, including EL 4590, using Navarre’s high resolution aeromagnetics and new gravity data obtained by Navarre sponsored Monash University researchers. Eclipse Prospect (EL 4590) Several broad intervals of copper and gold mineralisation intersected in shallow RC drilling beneath a supergene enriched copper blanket at Eclipse, believed to be associated with a VMS target, were compiled with geology, geophysics and alteration mineralogy into a new 3D model. The model is providing vectors towards a deeper target zone to be tested with subsequent drilling. Analysis of data from a trial gravity survey at Eclipse, undertaken in collaboration with Monash University, indicates the mineralisation discovered at Eclipse coincides with a significant density contrast boundary believed to be reflecting an ancient exhalative seafloor position, an ideal position for the formation of VMS deposits. Targets such as VMS generally occur in clusters within a single stratigraphic layer often referred to as the “favourable horizon”. The Company believes the favourable horizon detected at Eclipse can be tracked under cover for several tens of kilometres using geophysics and offers an exciting regional exploration target. Lexington Prospect (EL 5425) At Lexington, the search continues for porphyry copper-style mineralisation. A gravity survey to assist interpretation of the geology and structure of the prospect is underway to assist with advancing key exploration targets towards drill ready status. Glenlyle project (EL5 497) The Glenlyle exploration licence, granted in September 2014, covers 61 square kilometres of the Miga Arc copper belt in an area considered prospective for the discovery of VMS and porphyry-style copper-gold deposits. The Company has completed an initial review of previous exploration data and has identified several key exploration targets containing encouraging signs for porphyry and VMS prospectivity for follow-up activity. TANDARRA GOLD PROJECT (EL 4897) The Tandarra Gold Project is a greenfields gold discovery under shallow cover, 40km north of the 22 million ounce Bendigo Goldfield (Figure 1). Under a 2014 Heads of Agreement, project manager Catalyst Metals Limited (“Catalyst”) has the right to earn a 51% equity interest in the Tandarra Gold Project by incurring exploration expenditure of $3 million over four years to September 2018. On 29 July 2015 Catalyst reported that it had completed its first reconnaissance air-core drilling program at Tandarra, which comprised 3,853 metres of reconnaissance air-core drilling in 31 holes on 3 drill traverses (refer Catalyst ASX release 29 July 2015). The highlight of the drilling was an intersection of high-grade gold and another significant zone of mineralisation, approximately 500 metres apart:   2.0m @ 33.1 g/t Au including 1.0 m @ 65.6g/t Au from 129 metres (ACT221) 5.0m @ 0.5 g/t Au from 78 metres (ACT202) 6 Navarre Minerals Limited ABN 66 125 140 105 These intersections are located about seven kilometres north on strike of the main zone of high grade gold mineralisation at the Tomorrow Prospect and approximately seven kilometres south of Catalyst’s Four Eagles Gold Project (Figure 4). This new zone of mineralisation is virtually untested over a 14 kilometre strike and will require considerably more air-core drilling to evaluate the potential. Catalyst also reported it had commenced an evaluation of drill results at the Tomorrow Prospect in preparation for completing a mineralisation report by December 2015. Figure 4: Tandarra Gold Project showing interpreted gold zones and air core drilling (map reproduced courtesy of Catalyst Metals Limited; see Catalyst Metals ASX release 29 July 2015). 7 Navarre Minerals Limited ABN 66 125 140 105 LANDSBOROUGH FAULT GOLD PROJECT (EL 5280) No exploration activity was undertaken during the year. CORPORATE Share Placement and Entitlement Offer In March 2015, the Company completed a pro-rata, non-renounceable, 1 for 4 entitlement offer to existing shareholders (“Entitlement Offer”) and a placement of approximately 5.8 million shares (“Placement”) to Navarre’s largest shareholder, Crocodile Gold Corp. (now Newmarket Gold Inc.), in each case at an issue price of $0.03 per new share. Total proceeds of the capital raising were approximately $450,000 before costs, comprising $175,000 from the Placement and approximately $274,000 from the Entitlement Offer (representing approximately 50% take-up, by value, from eligible shareholders). The Company issued 9,139,286 new shares under the Entitlement Offer. As announced on 24 April 2015, the Company completed a placement of 5,000,000 shortfall shares (Shortfall Shares) from its Entitlement Offer, which closed on 13 March 2015, to raise an additional $150,000. The Shortfall Shares were issued at the Entitlement Offer price of $0.03 per share to professional and sophisticated investors, including major shareholder Newmarket Gold Inc., which subscribed for 2,000,000 Shortfall Shares. Review of registration for Research & Development Tax Incentive Program During the year, AusIndustry completed its review of the Company’s registration for the Federal Government’s Research & Development (“R&D”) Tax Incentive program (“Program”) in respect of R&D activities conducted by the Company in the 2011/12 financial year and, in December 2014, notified the Company that its registration was considered to have a high- risk of non-compliance with the eligibility requirements of the Program. The Company submitted to AusIndustry additional information and evidence in support of its claimed R&D activities. In September 2015, AusIndustry notified the Company of its intention to commence an examination of the Company’s registration for the Program in respect of activities conducted during the 2011/12 and 2012/13 financial years, which involves an assessment of the eligibility of the claimed R&D activities and will lead to a finding being made about the eligibility of those activities under the requirements of the Program. The Company intends to respond to the outstanding issues identified by AusIndustry and make further submissions for consideration during the examination of the registration. Geoff McDermott Managing Director 15 September 2015 Competent Person Declaration The information in this Annual Report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Wessley Edgar, who is a Member of The Australasian Institute of Mining and Metallurgy and who is Exploration Manager of Navarre Minerals Limited. Mr Edgar has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration, and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Edgar consents to the inclusion in the release of the matters based on his information in the form and context in which it appears. 8 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 The directors present their report together with the consolidated financial statements of the group comprising Navarre Minerals Limited (variously the “Company”, “Navarre” and “Navarre Minerals”) and its subsidiary (together, the “Group”) for the financial year ended 30 June 2015. Navarre Minerals is a company limited by shares, incorporated and domiciled in Australia. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: 1. DIRECTORS The names and details of the Company’s directors in office during the financial year and until the date of this report are as follows. The directors were in office during the entire period unless otherwise stated. Director Designation & independence status Qualifications, experience & expertise Directorships of other listed companies Special responsibilities during the year Kevin Wilson Chairman BSc (Hons), ARSM, MBA Appointed 30 April 2007 Non-executive Non- independent Mr Wilson has over 30 years’ experience in the minerals and finance industries. He was the Managing Director of Leviathan Resources Limited, a Victorian gold mining company, from its initial public offering in 2005 through to its sale in 2006. His previous experience includes 8 years as a geologist with the Anglo American Group in Africa and North America and 14 years as a stockbroking analyst and investment banker with CS First Boston and Merrill Lynch in Australia and USA. Mr Wilson is currently Managing Director of Rey Resources Limited, an energy exploration company listed on the ASX. Rey Resources Limited (ongoing) Geoff McDermott Appointed 19 May 2008 Managing Director Executive BSc (Hons), MAIG None Mr McDermott is a geologist with 30 years’ industry experience working in surface and underground metalliferous mining operations, in mineral exploration and as a consultant to the minerals industry. Mr McDermott has a broad range of international experience having worked as a geologist in Canada, Fiji and Australia for companies such as WMC and Rio Tinto and with the Government of the Northwest Territories, Canada. From 2002 until 2007, Mr McDermott was Chief Geologist and Group Geologist with MPI Mines Limited and Leviathan Resources Limited. Chairman of the Board Chairman of the Remuneration & Nomination Committee Member of the Audit Committee Member of the Remuneration & Nomination Committee John Dorward Director BComm (Hons), GradDipAppFin, CFA Appointed 15 August 2008 Non-executive Non- independent Mr Dorward is currently President, Chief Executive Officer and Director of Roxgold Inc., a TSX listed gold explorer. Mr Dorward was previously the Vice President Business Development of Fronteer Gold Inc., a TSX listed gold and uranium developer. Prior to joining Fronteer, he was CFO of Mineral Deposits Limited where he was responsible for financing the Sabodala Gold Project in Senegal, West Africa. Preceding this he was CFO and Company Secretary of Leviathan Resources Limited and Commercial Executive and Company Secretary of MPI Mines Limited. Before joining MPI Mines Limited, Mr Dorward had 8 years’ experience in the banking sector with a number of years spent in a senior resource project finance role with BankWest. Roxgold Inc. (ongoing) Member of the Audit Committee Member of the Remuneration & Nomination Committee Colin Naylor Director B.Bus (Acc), FCPA None Appointed 5 November 2010 Non-executive Independent Mr Naylor is currently Chief Financial Officer and Company Secretary of oil and gas explorer, MEO Australia Limited. Before joining MEO, Mr Naylor held a number of senior roles in major resource companies, including Woodside Petroleum, BHP Petroleum and Newcrest Mining. Mr Naylor also worked at MPI Mines Limited and Leviathan Resources Limited as Financial Controller. Mr Naylor was previously a member of the Victorian Divisional Council of the CPA and a previous member of the Group of 100 National Executive and Victorian State Chapter. Chairman of the Audit Committee Member of the Remuneration & Nomination Committee 9 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 1. DIRECTORS (cont.) Interests in the shares and options of the company As at the date of this report, the relevant beneficial and non-beneficial interests of each of the directors in the shares and share options in the Company were: K Wilson G McDermott J Dorward C H Naylor Ordinary Shares 5,872,431 6,409,180 4,229,713 2,450,963 NED Options MD Options 300,000 - 250,000 250,000 - 350,000 - - The terms of these options are set out in Note 21 to the consolidated financial statements and further details, including fair value at date of grant, are set out in the Remuneration Report. 2. COMPANY SECRETARY Ms Jane Nosworthy was appointed as Company Secretary on 16 January 2012. Ms Nosworthy has previously held legal, commercial and company secretarial roles at Oceana Gold Corporation, Leviathan Resources Limited and MPI Mines Limited, prior to which she was a Senior Associate in the Melbourne Office of law firm Allens Arthur Robinson. She holds a Bachelor of Arts and a Bachelor of Laws from the University of Adelaide, and a Certificate in Governance Practice from Chartered Secretaries Australia. 3. DIVIDENDS No dividend has been paid, provided or recommended during the financial year and to the date of this report (2014: nil). 4. OPERATING AND FINANCIAL REVIEW 4.1 Principal activities The principal activities during the year were mineral exploration in Victoria, Australia. The Company had 7 employees at 30 June 2015 including directors (2014: 10). 4.2 Environment, health and safety The Group conducts exploration activities in Victoria. No mining activity has been conducted by the Group on its exploration licences. The Group’s exploration operations are subject to environmental and health and safety regulations under the various laws of Victoria and the Commonwealth. While exploration activities to date have had a low level of environmental impact, the Group has adopted a best practice approach in satisfaction of the regulations of relevant government authorities. 4.3 Review of operations The Group maintained an active exploration program during the year with the objectives of identifying economic copper and gold mineral deposits. Direct exploration expenditure during the 2015 financial year was $853,053. The following summary of the Company’s exploration activities during the year should be read in conjunction with the Managing Director’s Review of Operations 2015, which forms part of and is included earlier in this Annual Report. 10 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 4. OPERATING AND FINANCIAL REVIEW (cont.) 4.3 Review of operations (cont.) (a) Bendigo North Gold Project (Tandarra) (EL 4897) Under a 2014 Heads of Agreement, project manager Catalyst Metals Limited (“Catalyst”) has the right to earn a 51% equity interest in the Tandarra Gold Project by incurring exploration expenditure of $3 million over four years to September 2018. On 29 July 2015 Catalyst reported that it had completed its first reconnaissance air-core drilling program at Tandarra, resulting in the intersection of high-grade gold and the discovery of a new significant zone of mineralisation, approximately 500 metres apart (refer Catalyst ASX release 29 July 2015):   2.0m @ 33.1 g/t Au including 1.0 m @ 65.6g/t Au from 129 metres (ACT221) 5.0m @ 0.5 g/t Au from 78 metres (ACT202) (b) Landsborough Fault Gold Project (Kingston) (EL 5280) No exploration activity was undertaken on the Kingston licence during the year. (c) Western Victoria Copper Project (EL 4590, EL 5425, EL 5426 & EL 5497) Eclipse Prospect (EL 4590) Following the completion of a shallow RC drilling program, intersecting several broad intervals of copper and gold mineralisation believed to be associated with a VMS target, the Company completed a trial gravity survey at Eclipse, in collaboration with Monash University. Lexington Prospect (EL 5425) A gravity survey to assist interpretation of the geology and structure of the prospect is underway to assist with advancing key exploration targets towards drill ready status. Glenlyle Project (EL5 497) Following grant of the Glenlyle exploration licence in September 2014, the Company completed a review of previous exploration data and has identified several key exploration targets for follow-up activity. (d) Stawell Corridor Gold Project (Ararat (EL 5476) & Tatyoon (EL 5480)) Ararat (EL 5476) New gold prospects on Ararat licence – Irvine and Benno Reconnaissance mapping and sampling on the recently granted Ararat exploration licence resulted in the discovery of two significant gold prospects called Irvine and Benno only 15km south of Stawell’s Magdala Gold Mine. Mapping and surface rock chip sampling has confirmed the existence of Stawell-style gold mineralisation occurring along at least 6 mineralised surfaces. Best rock chip results include 22.8 g/t, 19.3 g/t, 16.9 g/t, 14.8 g/t, 13.5 g/t and 11.0g/t (see ASX release 10 August 2015). Tatyoon (EL 5480) The Company completed a drill program testing several induced polarisation (“IP”) geophysical anomalies detected in buried basement rocks at the Grange prospect. The drilling intersected broad zones of disseminated sulphide alteration interpreted to be of sufficient intensity and distribution to explain the IP chargeability response. The sulphide alteration lacked the intensity required to form economic mineralisation resulting in a down-grade of the prospectivity of the western side of the Grange basalt dome. 11 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 4. OPERATING AND FINANCIAL REVIEW (cont.) 4.4 Review of financial position (a) Results for the year The net loss for the financial year, after provision for income tax, was $505,344 (2014: loss after tax of $602,682). (b) Review of financial condition at the balance date At balance date the Group held cash and cash equivalents of $498,039. During the year the Group decreased the cash balance by $709,137 following net proceeds from share issues of $574,832 and interest received of $22,803 which was used to partially meet exploration and capital cash outflows of $845,814 and corporate costs of $460,958. (c) Share issues During the year the Company raised a total of $599,178 (before transaction costs) from the placement of 5,833,333 ordinary shares at $0.03 per share to Crocodile Gold Australia Pty Ltd and 14,139,286 ordinary shares at $0.03 per share from the Company’s 2015 Entitlement Offer (and subsequent shortfall placement). (d) Significant changes in the state of affairs of the Group during the financial year (i) On 12 June 2014, the Company signed a formal Heads of Agreement with Catalyst Metals Ltd (“Catalyst”) for Catalyst to earn a 51% interest in the Company’s wholly-owned Bendigo North Gold Project (Tandarra) (EL 4897) and to acquire the Company’s interests in the Raydarra and Sebastian Gold Projects, which were subject to farm-in and joint venture arrangements with Castlemaine Goldfields Ltd (“Castlemaine”), a subsidiary of LionGold Corp. The transaction involved the following:   In order to earn a 51% equity interest in Tandarra, Catalyst agreed to spend $3 million on exploration during a four-year period commencing on satisfaction of a condition precedent whereby Catalyst assumed a proportionate share of Navarre’s existing royalty obligations to Leviathan Resources Ltd in respect of Tandarra. Catalyst’s expenditure must be sufficient to maintain the tenement in good standing and be not less than $200,000 per annum and not less than $800,000 within two years. Catalyst must also generate a mineralisation report sufficient for the requirements of the Mineral Resources (Sustainable Development) Act 1990 (Vic) by 14 November 2015. Catalyst agreed that, on satisfaction of the condition precedent, it would pay Navarre $50,000 cash and issue to Navarre 250,000 fully paid ordinary shares in Catalyst, with a further 250,000 Catalyst shares to be issued twelve months later. Navarre also agreed to transfer to Catalyst its interests in two gold projects owned by Castlemaine Goldfields Limited, which are subject to farm-in and joint venture arrangements between Navarre and Castlemaine. Navarre had earned a 51% interest in the Sebastian Project (EL 4536 and EL 4974) and was in the process of earning a 51% interest in the Raydarra Project (EL 5266). In exchange, Navarre will receive a 1% net smelter royalty on Catalyst’s entitlement to proceeds from future production from the area covered by the tenements that comprised the Sebastian and Raydarra Projects at the time of executing the agreement with Navarre. On completion of the transaction with Catalyst as described above, Navarre received from Catalyst $50,000 cash and 250,000 fully paid ordinary shares in Catalyst, which were issued on 12 September 2014. (ii) In December 2014, the Company was notified by AusIndustry that its registration for the Federal Government’s Research & Development (“R&D”) Tax Incentive program (“Program”) in respect of R&D activities conducted in the 2011/12 financial year remained under review and was considered to have a high-risk of non-compliance with the eligibility requirements of the Program. See paragraphs 4.4(e)(ii) and 4.5(b)(i) below for more information. 12 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 4. OPERATING AND FINANCIAL REVIEW (cont.) 4.4 Review of financial position (cont.) (e) Significant events after the balance date In accordance with the terms of Navarre’s agreement with Catalyst as described in paragraph 4.4(d) above, Catalyst is required to issue a further 250,000 Catalyst shares to Navarre. It has been agreed between Navarre and Catalyst that those shares will be issued on 21 September 2015. In September 2015, AusIndustry notified the Company of its intention to commence an examination under section 27F of the Industry Research and Development Act 1986 (Cth) of the Company’s registration for the Federal Government’s Research & Development (“R&D”) Tax Incentive program (“Program”). The examination will involve an assessment of the eligibility of the R&D activities registered by the Company and will lead to a finding being made about the eligibility of those activities under the requirements of the Program. More information about the AusIndustry review is set out in paragraph 4.5(b)(i) below. Other than the above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations, or state of affairs of the Group, in future financial years. (f) Likely developments and expected results During the course of the next financial year, the Group will continue its mineral exploration activities and will investigate additional opportunities in which the Group may wish to participate. The Group is mindful of the external economic conditions currently affecting the resource industry and is responding with a considered and methodical program of cost reductions. The Group is working to strike a balance between conserving cash resources and maintaining exploration activities at reduced expenditure levels. Strategies implemented to date include staff reductions, reduced hours of work, reductions in overheads and cessation of work programs not linked to advancing the Group’s key prospects. In June/July 2015, the Company implemented a new program of cost reduction measures including reductions in staffing levels, notably, termination of the Exploration Manager due to redundancy. All staff have agreed to reductions in salary or hours of work, including a 40% salary reduction for the Managing Director, and the Company’s non-executive directors have agreed to defer payment of directors’ fees. Together, these measures are expected to deliver a significant reduction in corporate overheads and the measures will remain in place until such time as the Company’s cash position improves significantly as the result of improved economic conditions, exploration success and/or better access to equity markets. In accordance with the Company’s remuneration philosophy, the Company is considering issuing equity incentives, such as shares or share options, in lieu of salary forgone by senior management or directors. Shareholder approval will be required for any equity incentives to be granted to directors. 4.5 Business strategy and prospects for future financial years (a) Business strategy The Group’s mission is to reward shareholders by creating value through mineral discovery. The Group’s goal is to define a maiden mineral resource and to become a low cost Victorian copper and gold producer through exploration success. The Group undertakes an active exploration program within emerging and proven mineral corridors, with the objective of identifying economic copper and gold mineral deposits. The Group’s strategy for the next twelve months for its existing portfolio of exploration assets is to focus its financial and managerial resources on development of its most prospective mineral opportunities at or on the Group’s Ararat Exploration Licence (EL 5476). 13 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 4. OPERATING AND FINANCIAL REVIEW (cont.) 4.5 Business strategy and prospects for future financial years (cont.) (b) Future prospects of the Group The key driver of the Group’s future prospects will be the success of its exploration programs. The discovery of an economic mineral deposit has the potential to significantly increase shareholder wealth. The key material risks faced by the Group that are likely to have an effect on its future financial prospects include: (i) (ii) (iii) the outcome of an examination of the Company’s registration for the Federal Government’s Research and Development (“R&D”) Tax Incentive Program (“Program”) in respect of activities conducted by the Company in the 2011/12 and 2012/13 financial years as part of its work programs. The examination will be conducted by AusIndustry, a government agency responsible for administering the Program, and follows on from a review by AusIndustry of the activities registered by the Company under the Program. The Company received a tax refund of $1.4 million (“Refund”) in respect of R&D activities conducted by the Company in the 2011/12 financial year. In 2014, AusIndustry undertook a Compliance Activity Review of the Company’s registration under the program. An Activity Review Meeting was conducted by AusIndustry in July 2014 and the Company responded to a request for additional information. In December 2014, AusIndustry notified the Company that the registration remained under review and was considered to have a high-risk of non-compliance with the eligibility requirements of the Program. The Company submitted to AusIndustry additional information and evidence in support of its claimed R&D activities. In September 2015, AusIndustry notified the Company of its intention to commence an examination of the Company’s registration for the Program under section 27F of the Industry Research and Development Act 1986 (Cth). The examination involves an assessment of the eligibility of the claimed R&D activities and will lead to a finding being made about the eligibility of those activities under the requirements of the Program. The Company intends to respond to the outstanding issues identified by AusIndustry and make further submissions for consideration by AusIndustry during the examination of the registration. Taking into account advice from the Company’s R&D tax consultant and the views of management, the Directors and the Company’s R&D tax consultant believe the Company’s R&D registration is in compliance with the requirements of the Program. However, there is a risk that AusIndustry may disagree with the Company’s assessment of the eligibility of its R&D activities and make a finding that some or all registered activities are ineligible under the Program. In the event of an adverse finding, the Company would pursue all available avenues for appeal. Even if the Company pursues avenues of appeal, there remains a risk that the Company may be required to repay to the Australian Taxation Office (“ATO”) some or all of the Refund, in which case the Company may be required to draw on its cash reserves and/or may require additional capital in order to meet that liability to the ATO. exploration risk – the Group’s mineral tenements are in the early stages of exploration, and there can be no assurance that exploration of the tenements currently held by the Group, or any other tenements that may be acquired in the future, will result in the discovery of an economic mineral deposit. Until the Group is able to realise value from its mineral tenements, it is likely to incur ongoing operating losses. If exploration is successful, there will be additional costs and processes involved in moving to the development phase. By its nature, exploration risk can never be fully mitigated, but the Group has the benefit of significant exploration expertise through its management team and of operational and business expertise at both board and management level; requirements for capital – as exploration costs reduce the Group’s cash reserves, the Group will require additional capital to support the long term exploration and evaluation of its projects. The past twelve months have been characterised by equity market volatility and poor market sentiment towards the mineral exploration sector, which has limited the Group’s access to capital. The Group has responded to the external economic conditions affecting the resources industry with a considered and methodical program of cost reductions, including significant reductions in executive salaries or hours of work and reductions in staffing levels. The Group continues to work to strike a balance between conserving cash and maintaining exploration activities at reduced levels. If the Group is unable to obtain additional financing as needed, through equity, debt or joint venture financing, it may be required to further scale back its exploration programs. The Group will continue to consider capital raising initiatives, as required, including possible corporate opportunities; and 14 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 4. OPERATING AND FINANCIAL REVIEW (cont.) 4.5 Business strategy and prospects for future financial years (cont.) (b) Future prospects of the Group (cont.) (iv) tenement title – the Group could lose title to its mineral tenements if insufficient funds are available to meet the relevant annual expenditure commitments, as and when they arise. The Group closely monitors its compliance with licence conditions, including expenditure commitments, and maintains a dialogue with the relevant State government representatives who are responsible for enforcing licence conditions. This is not intended to be an exhaustive list of the risk factors to which the Company is exposed. Navarre Minerals is also exposed to a range of market, financial and governance risks. The Company has risk management and internal control systems to manage material business risks which include insurance coverage over major operational activities and regular review of material business risks by the Board. 5. SHARE OPTIONS Options issued during the financial year During the financial year, the Company issued a total of 350,000 share options to senior employees of the Company under the Navarre Minerals Limited Option Plan. No other options were issued by the Company during the financial year. Options expired during the financial year 1,500,000 share options held by the Managing Director and 650,000 share options held by non-executive directors expired on 31 December 2014. 165,000 share options held by a senior employee of the Company expired on 5 March 2015. Unissued shares under option At the date of this report, there were 2,250,000 unissued ordinary shares of the Company under option. The terms of these options are as follows: Expiry Date 31 December 2015 31 December 2015 31 December 2015 31 December 2016 31 December 2017 31 December 2018 31 December 2019 Exercise Price $0.25 $0.30 $0.35 $0.30 $0.15 $0.10 $0.04 Number 250,000 400,000 400,000 300,000 400,000 350,000 150,000 These options do not entitle the holder to participate in any share issue of the Company. Shares issued on the exercise of Options During or since the end of the financial year, there has been no issue of ordinary shares as a result of the exercise of options. 6. INDEMNIFICATION AND INSURANCE OF DIRECTORS The Company paid a premium in respect of a contract insuring all directors of the Company against legal costs incurred in defending proceedings as permitted by Section 199B of the Corporations Act 2001. 15 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 7. BOARD AND COMMITTEE MEETINGS The following table sets out the members of the Board of Directors and the members of the Committees of the Board, the number of meetings of the Board and of the Committees held during the year and the number of meetings attended during each director’s period of office. Board of Directors Audit Committee Remuneration & Nomination Committee K Wilson G McDermott J Dorward C H Naylor A – Number of meetings attended B – Number of meetings held during the time the director held office during the year A 4 - 4 4 B 4 - 4 4 A 3 3 3 3 A 8 8 8 7 B 8 8 8 8 B 3 3 3 3 8. AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES The directors have received the independence declaration from the auditor, RSM Bird Cameron Partners, set out on page 17. Non Audit Services There were no non-audit services provided during the year by Auditor RSM Bird Cameron Partners. 16 RSM Bird Cameron Partners Level 21, 55 Collins Street Melbourne VIC 3000 GPO Box 248 Collins Street West VIC 8007 T +61 3 9286 8000 F +61 3 9286 8299 www.rsmi.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Navarre Minerals Limited for the year ended 30 June 2015, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. RSM BIRD CAMERON PARTNERS J S CROALL Partner Dated: 15 September 2015 Melbourne, Victoria Liability limited by a scheme approved under Professional Standards Legislation Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036 RSM Bird Cameron Partners is a member of the RSM network. Each member of the RSM network is an independent accounting and advisory firm which practises in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. 17 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) The Remuneration Report for the year ended 30 June 2015 outlines the remuneration arrangements of the Company, in accordance with Section 300A of the Corporations Act 2001 and its regulations. The information provided in this Remuneration Report has been audited as required by Section 308(3C) of the Corporations Act 2001. This Remuneration Report forms part of the Directors’ Report. The Remuneration Report details the remuneration arrangements for Key Management Personnel (“KMP”), who are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the Company. 9.1 Key Management Personnel for the year ended 30 June 2015 Directors K Wilson G McDermott J Dorward C H Naylor Executives Chairman (non-executive) Managing Director Director (non-executive) Director (independent non-executive) W Edgar J Nosworthy Exploration Manager Company Secretary 9.2 Board oversight of remuneration The policy for determining the nature and amount of remuneration for directors and executives is set by the Board of Directors as a whole. The Board established a Remuneration and Nomination (“R&N”) Committee to provide the Board with a regular, structured opportunity to focus on remuneration and nomination issues. All directors of the Company, including the Managing Director, are members of the R&N Committee. Any potential for, or perception of, conflict of interest resulting from the Managing Director’s membership of the R&N Committee is addressed by ensuring that the Managing Director withdraws from committee meetings during any discussion of his remuneration arrangements or performance, and takes no part in the discussion or decision-making process in relation to such matters. The Board may obtain professional advice when appropriate to ensure that the Company attracts and retains talented and motivated directors and employees who can enhance Company performance through their contributions and leadership. 9.3 Non-executive director remuneration arrangements The Board seeks to set non-executive director remuneration at a level that provides the Company with the ability to attract and retain directors of high calibre, at a cost acceptable to shareholders. The amount of aggregate remuneration approved by shareholders and the fee structure for non-executive directors is reviewed annually by the Board against fees paid to non-executive directors of comparable companies. The Company’s Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors must be determined from time to time by members in a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The maximum aggregate annual remuneration for non- executive directors is currently set at $300,000 per annum. Any increase in this amount will require shareholder approval at a general meeting. 18 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.3 Non-executive director remuneration arrangements (cont.) Non-executive directors are remunerated at marketplace levels by way of fixed fees, in the form of cash and statutory superannuation contributions, and (from time to time, as appropriate) options issued through the Navarre Minerals Limited Option Plan (“NMLOP”). The Chairman, Mr Wilson, receives a base fee of $40,000 per annum (excluding statutory superannuation) and the other non-executive directors receive $30,000 per annum (excluding statutory superannuation). As part of the Company’s recent implementation of a range of cost reduction measures, the non- executive directors have agreed to defer payment of directors’ fees until such time as the Company’s cash position improves significantly as the result of improved economic conditions, exploration success and/or better access to equity markets. In accordance with the Company’s remuneration philosophy, the Company may consider issuing equity incentives, such as shares or share options, in lieu of salary forgone by non-executive directors. Shareholder approval will be required for any equity incentives to be granted to directors. In addition to directors’ fees, the directors are entitled to be paid all travelling and other expenses they incur in attending to the Company’s affairs, including attending and returning from general meetings of the Company or meetings of the Board or of committees of the Board. No additional remuneration is paid to directors for service on board committees or on the board of the wholly owned subsidiary, but additional remuneration may be paid to directors if they are called upon to perform extra services or make any special exertion for the purposes of the Company. The non-executive directors have no leave entitlements and do not receive any retirement benefits, other than statutory superannuation and salary sacrifice superannuation (if directors wish to exercise their discretion to make additional superannuation contributions by way of salary sacrifice). The remuneration of the Company’s non-executive directors for the year ended 30 June 2015 and 30 June 2014 is detailed in Table 1 and Table 2 of this Remuneration Report. 9.4 Executive remuneration arrangements The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to:    ensure total remuneration is competitive by market standards; reward executives for exceptional individual performance; and align the interests of executives with those of shareholders. Executive remuneration consists of fixed remuneration and, where appropriate, variable (at risk) remuneration. Fixed remuneration The base salaries of the Managing Director and other executives are fixed. Fixed remuneration is set at a market competitive level, taking into account an individual’s responsibilities, performance, qualifications and experience, and current market conditions in the mining industry. Base salaries are reviewed annually, but executive contracts do not guarantee any increases in fixed remuneration. In light of the financial environment in which the Company is operating, there were no increases to base salaries for executives for calendar year 2015 and the Company subsequently agreed with all staff to reduce salaries or hours of work, as part of a range of cost reduction measures designed to ensure that the Company manages its cash position while retaining the ability to undertake further exploration. These measures included salary reductions of 40% for each of the Managing Director and Exploration Manager, effective 1 July 2015. It is expected that these reductions will be in place until such time as the Company’s cash position improves significantly as the result of improved economic conditions, exploration success and/or better access to equity markets. In accordance with the Company’s remuneration philosophy, the Company may consider issuing equity incentives, such as shares or share options, in lieu of salary forgone by senior management. Shareholder approval will be required for any equity incentives to be granted to the Managing Director. Executives receive statutory superannuation from the Company and may, in their discretion, make additional superannuation contributions by way of salary sacrifice. The fixed component of executives’ remuneration is detailed in Table 1 and Table 2 of this Report. 19 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.4 Executive remuneration arrangements (cont.) Variable/at risk remuneration The performance of executives is measured against criteria agreed annually with each executive and is based predominantly on the overall success of the Company in achieving its broader corporate goals. Variable remuneration is linked to predetermined performance criteria. Short term incentives  Managing Director The Managing Director’s remuneration package for calendar year 2014 included a short term incentive in the form of a cash payment of up to $60,000, subject to achievement of agreed KPIs. Those KPIs comprised performance measures in relation to:    health and safety, because the Company regards the safety of its people as a major priority; delivery of operating programs and exploration success, because these are key drivers of shareholder value; and delivery of finance at reasonable cost that enables the Company to execute its business plans. In February 2015, the R&N Committee (excluding the Managing Director) assessed the Managing Director’s performance against his 2014 short term incentive KPIs and determined that two of five KPIs had been met. Accordingly, the Board (excluding the Managing Director) approved a cash payment of $18,000 to the Managing Director by way of short term incentive for calendar year 2014. In light of the Company’s cash position, the Managing Director’s remuneration package for calendar year 2015 does not include any short term incentive in the form of a cash payment.  Exploration Manager The Exploration Manager’s remuneration package for calendar year 2014 included a short term incentive in the form of a cash payment of up to $30,000, subject to achievement of agreed KPIs. Those KPIs comprise performance measures in relation to:   health and safety, because the Company regards the safety of its people as a major priority; and delivery of drill programs and exploration success, because these are key drivers of shareholder value. In February 2015, the R&N Committee assessed the Exploration Manager’s performance against his 2014 short term incentive KPIs and determined that two of three KPIs had been met. Accordingly, a cash payment of $12,000 was made to the Exploration Manager. In light of the Company’s cash position, the Executive Manager’s remuneration package for calendar year 2015 does not include any short term incentive in the form of a cash payment. 20 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.4 Executive remuneration arrangements (cont.) Long term incentives The Company considers the retention of high calibre staff to be essential to the growth and success of the Company. Executives are eligible to participate in the NMLOP, which is used to provide long term performance and retention incentives, as appropriate, in the form of the grant of share options over unissued shares in the Company.  Managing Director The Managing Director’s remuneration package for calendar year 2014 included a long term incentive in the form of a grant of up to 800,000 share options, to be granted subject to achievement of agreed KPIs. The Managing Director was eligible to receive 100,000 options if he was employed by the Company at 31 December 2014. The remaining 700,000 options were subject to agreed KPIs related to improvement in the Company’s share price during the 2014 calendar year, relative to the prevailing share price when the KPIs were set by the Board (excluding the Managing Director) in January 2014. The Managing Director was eligible to receive 350,000 options if the volume weighted average price (VWAP) of the Company’s shares in December 2014 was 15 cents or higher, and a further 350,000 options if the VWAP was 15 cents or higher. The Company obtained shareholder approval for the grant of these options (subject to achievement of the applicable KPIs) at the Company’s 2014 AGM. In February 2015, the R&N Committee (excluding the Managing Director) determined that the Managing Director was employed by the Company at 31 December 2014 and was therefore entitled to receive 100,000 options. The R&N Committee also determined that none of the other KPIs applicable to the Managing Director’s long term incentive options had been met and therefore, no other options were granted to the Managing Director in respect of calendar year 2014. The Managing Director’s remuneration package for calendar year 2015 includes a long term incentive in the form of a grant of up to 500,000 share options. The KPIs relate to improvement in the Company’s share price, relative to the prevailing share price when the KPIs were set by the Board (excluding the Managing Director) in February 2015. The Managing Director will be eligible to receive 250,000 options if the volume weighted average price (VWAP) of the Company’s shares in December 2015 is 4 cents or higher, and a further 250,000 options if the VWAP is 6 cents or higher. Shareholder approval for the grant of these options will be sought at the Company’s 2015 AGM. The Managing Director’s performance against his 2015 long term incentive KPIs will be assessed by the R&N Committee (excluding the Managing Director) at its first meeting in 2016. No options will be granted to the Managing Director unless shareholder approval has been obtained and the applicable KPIs have been met.  Exploration Manager The Exploration Manager’s remuneration package for calendar year 2014 included a long term incentive in the form of a grant of up to 600,000 share options. The Exploration Manager was eligible to receive 100,000 options if he was employed by the Company at 31 December 2014. The remaining 500,000 options were subject to achievement of agreed KPIs, which mirrored the Managing Director’s long term incentive KPIs and related to improvement in the Company’s share price during the 2014 calendar year. The Exploration Manager was eligible to receive 250,000 options if the VWAP of the Company’s shares in December 2014 was 10 cents or higher, and a further 250,000 options if the VWAP was 15 cents or higher. In February 2015, the R&N Committee determined that the Exploration Manager was employed by the Company at 31 December 2014 and was therefore entitled to receive 100,000 options. The R&N Committee also determined that none of the other KPIs applicable to the Exploration Manager’s long term incentive had been met and therefore, no other options were granted to the Exploration Manager in respect of calendar year 2014. The Exploration Manager’s remuneration package for calendar year 2015 includes a long term incentive in the form of a grant of up to 500,000 share options, to be granted subject to achievement of agreed KPIs. As the Exploration Manager’s employment has been terminated, none of the 500,000 share options comprising the long- term incentive for the Exploration Manager will be granted. 21 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.4 Executive remuneration arrangements (cont.)  Other executives and senior employees During the financial year, other executives and senior employees have been granted options which have time-based vesting conditions, therefore requiring them to remain employed with the Company through to the vesting date of the options. See page 26 for details of all options granted to the Managing Director and other key management personnel during the financial year. The Company prohibits executives from entering into arrangements to protect the value of unvested share options. The prohibition includes entering into contracts to hedge their exposure to options awarded as part of their remuneration package. Subject to the exception noted below, the Managing Director approves the terms and conditions of consultants’ contracts, including fees, taking into account market conditions for the services that are provided. Consulting contracts do not include any guaranteed fee increases. 9.5 Executive Contractual Arrangements Remuneration arrangements for Key Management Personnel are formalised in service agreements. Details of these contracts are provided below.  Managing Director - - - - - Mr Geoff McDermott entered into an executive service agreement dated 10 December 2010 which contains the following major terms (including amendments made in March 2013 and July 2015):- Term: From 31 March 2011 until either the Company or Mr McDermott terminates the agreement. Notice: The Company may terminate the agreement at any time by giving six months’ notice in writing. Mr McDermott may terminate the agreement at any time by giving six months’ written notice to the Company or on one month’s written notice to the Company if a ‘fundamental change’ to his employment occurs or the Company has failed to remedy a notified breach of its obligations under the agreement. The Company may immediately terminate the agreement by giving written notice in certain circumstances, including if serious misconduct has occurred. The Company may elect to pay Mr McDermott in lieu of part or all of any notice period. Base salary: Mr McDermott’s total fixed remuneration comprises a base salary plus statutory superannuation. This is reviewed by the R&N Committee (excluding the Managing Director) on an annual basis. For the 2014 financial year, Mr McDermott’s total fixed remuneration comprised base salary of $245,936 per annum plus superannuation of $17,775. In line with the Company’s emphasis on cost management in a difficult external economic environment, it was agreed, on review in January 2015, to maintain his base salary at the level set in April 2012. It was subsequently agreed with Mr McDermott to reduce his base salary, effective 1 July 2015, to $147,562 per annum (plus superannuation of $12,296) as part of a broader program of cost reduction measures. Mr McDermott’s base salary will revert to its previous level once the Company’s cash balance returns to $1.5 million, or sooner if the Board (excluding Mr McDermott) determines that circumstances are appropriate to do so; Short-term incentive: Mr McDermott is eligible to receive an annual short-term incentive payment on terms decided by the Board (excluding the Managing Director). However, in light of the Company’s limited cash resources, no short-term incentive payment was included in Mr McDermott’s remuneration package for calendar year 2015. Long-term incentive: Subject to receiving any required or appropriate shareholder approval, Mr McDermott is eligible to participate in the Company’s long-term incentive arrangements (as amended or replaced) on terms decided by the Board. For calendar year 2015, the maximum number of options that may be granted to Mr McDermott by way of long-term incentives is 500,000, subject to the achievement of KPIs as approved by the Board, and approval of shareholders at the Company’s 2015 Annual General Meeting. 22 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.5 Executive Contractual Arrangements (cont.)  Termination payments: If Mr McDermott’s employment is terminated by the Company for any reason (other than in circumstances warranting summary dismissal), Mr McDermott is entitled to a retirement benefit calculated as one month’s total fixed remuneration, plus two weeks’ total fixed remuneration for each completed or part- completed year of continuous service with the Company. If Mr McDermott resigns within six months of a ‘fundamental change’, Mr McDermott is entitled to a lump sum payment equivalent to six months’ total fixed remuneration (to be calculated by reference to Mr McDermott’s total fixed remuneration prior to the reduction effected from 1 July 2015).  Exploration Manager - - - - - - Mr Wessley Edgar entered into an executive service agreement dated 13 August 2012 (as amended in March 2013 and July 2015). The Company has given notice to Mr Edgar of the termination of his employment due to redundancy, in light of the Company’s cash position, and his employment will conclude on 18 September 2015. The major terms of Mr Edgar’s executive service agreement during the 2014 financial year were as follows:- Term: From 13 August 2012 until either the Company or Mr Edgar terminates the agreement. As noted above, notice of termination has been given by the Company and Mr Edgar’s employment will conclude on 18 September 2015. Notice: The Company may terminate the agreement at any time by giving three months’ notice in writing. Mr Edgar may terminate the agreement at any time by giving three months’ written notice to the Company or on one month’s written notice to the Company if a ‘fundamental change’ to his employment occurs or the Company has failed to remedy a notified breach of its obligations under the agreement. The Company may immediately terminate the agreement by giving written notice in certain circumstances, including where serious misconduct has occurred. The Company may elect to pay Mr Edgar in lieu of part or all of any notice period. Base salary: Mr Edgar’s total fixed remuneration comprises a base salary plus statutory superannuation. Total fixed remuneration is reviewed by the R&N Committee on an annual basis. In the 2014 financial year, Mr Edgar’s base salary initially remained unchanged from the level of base salary he received on commencing employment with the Company in August 2012. In March 2015, Mr Edgar’s base salary was reduced by 15% to $194,463 per annum. It was subsequently reduced by a further 25% to $137,268 per annum, with effect from 1 July 2015, as part of a program of cost reduction measures. Short-term incentive: Mr Edgar is eligible to receive an annual short-term incentive payment on terms decided by the Board. However, in light of the Company’s limited cash resources, no short-term incentive payment was included in Mr Edgar’s remuneration package for calendar year 2015. Long-term incentive: Mr Edgar is eligible to participate in the Company’s long-term incentive arrangements (as amended or replaced) on terms decided by the Board, but he will not receive any options in respect of calendar year 2015 in light of the termination of his employment. Termination payments: If Mr Edgar’s employment is terminated by the Company for any reason (other than in circumstances warranting summary dismissal), or if Mr Edgar resigns due to a ‘fundamental change’ or a failure by the Company to remedy a notified breach of its obligations, Mr Edgar is entitled to a retirement benefit calculated as one month’s total fixed remuneration, plus two weeks’ total fixed remuneration for each completed or part- completed year of continuous service with the Company. At the conclusion of Mr Edgar’s employment on 18 September 2015, Mr Edgar will receive a retirement benefit of $46,122, calculated on the basis that he will have completed three full years, and commenced a fourth year, of employment with the Company. By agreement with Mr Edgar, the retirement benefit has been calculated by reference to his base salary at the time notice of termination of employment was given in June 2015. 23 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.5 Executive Contractual Arrangements (cont.)  Other Executives All executives have standard employment agreements. The Company may terminate the executive’s employment agreement by written notice (ranging from four weeks to three months’ notice) or providing payment in lieu of the notice period (based on the fixed component of the executive’s remuneration). The Company may terminate the agreement at any time without notice if serious misconduct has occurred. The executive may terminate the agreement by written notice to the Company (ranging from four weeks to three months’ notice). The Company Secretary is entitled to a retirement benefit calculated as one month’s total fixed remuneration, plus two weeks’ total fixed remuneration for each completed or part-completed year of continuous service with the Company, if employment is terminated by the Company for any reason (other than in circumstances warranting summary dismissal), or if the Company Secretary resigns due to a ‘fundamental change’ or a failure by the Company to remedy a notified breach of its obligations. For all employees, on cessation of employment, any options that have not vested will be forfeited and any options that have vested must be exercised within 90 days or will be forfeited. 9.6 Remuneration of Key Management Personnel of the Company Table 1: Remuneration for the year ended 30 June 2015 Short term Post Employment Share- based Payment Long term Total Performance Related Directors fees $ Salary $ STI cash bonus $ Superannuation benefits $ Option plan1 $ Long service leave $ $ 43,800 32,850 32,850 109,500 282,719 243,386 62,126 588,231 697,731 % - - - - 6.4 5.8 10.7 6.6 5.7 - - - - - - - - - Non– executive directors K Wilson J Dorward C H Naylor Sub-total non-executive directors Executive director G McDermott 40,000 30,000 30,000 100,000 - - - - - - - - 3,800 2,850 2,850 9,500 - 229,719 18,000 35,000 - - - - - Other key management personnel W Edgar J Nosworthy Sub-total executive KMP - - - 202,742 12,000 50,636 - 483,097 30,000 30,000 26,545 4,811 66,356 75,856 2,099 6,679 8,778 8,778 TOTAL 100,000 483,097 1Refer Note 21 to the consolidated financial statements for fair value calculation of options. 24 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.6 Remuneration of Key Management Personnel of the Company (cont.) Table 2: Remuneration for the year ended 30 June 2014 Short term Post Employment Share- based Payment Long term Total Performance Related Directors fees $ Salary $ STI cash bonus $ Superannuation benefits $ Option plan1 $ Long service leave $ Non– executive directors K Wilson J Dorward C H Naylor Sub-total non-executive directors Executive director G McDermott 40,000 7,850 30,000 77,850 - - - - - - - - 3,700 25,000 2,775 2,437 2,031 2,031 31,475 6,499 - 238,711 18,000 25,000 9,231 Other key management personnel W Edgar J Nosworthy Sub-total executive KMP - - - TOTAL 77,850 520,175 9.7 Remuneration Mix 228,780 12,000 52,684 - 520,175 30,000 30,000 17,775 4,881 47,656 79,131 4,453 11,439 25,123 31,622 - - - - - - - - - $ 46,137 34,881 34,806 115,824 290,942 263,008 69,004 622,954 738,778 % 5.3 5.8 5.8 5.6 9.4 6.3 16.6 8.8 8.3 The Company’s executive remuneration is structured as a mix of fixed annual remuneration and variable ‘at risk’ remuneration. The mix of these components varies for different management levels. Table 3: Relative proportion and components of total remuneration packages for the year ended 30 June 2015 Executives G McDermott W Edgar J Nosworthy % of Total Remuneration Performance-based remuneration Fixed remuneration % Short Term Incentive % Long Term Incentive % 93.6 95.0 100.0 6.4 5.0 - - - - 25 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.8 Equity instruments Table 4: Options granted, vested and lapsed during the year Number of options granted during 2015 Grant date Fair value per option at grant date ($) Exercise price per option ($) Expiry Date Vest Date Number of options vested during 2015 Number of options lapsed during 2015 Directors G McDermott G McDermott G McDermott K Wilson G McDermott J Dorward C H Naylor Executives W Edgar W Edgar W Edgar J Nosworthy J Nosworthy 33,333 33,333 33,334 - - - - 16 Feb 15 16 Feb 15 16 Feb 15 25 Nov 11 21 Mar 11 25 Nov 11 25 Nov 11 33,333 33,333 33,334 100,000 - 16 Feb 15 16 Feb 15 16 Feb 15 23 Jun 15 19 Mar 12 0.0075 0.0055 0.0029 - - - - - - - 0.0087 - 0.10 0.10 0.10 - - - - 0.10 0.10 0.10 0.04 - 31 Dec 18 31 Dec 18 31 Dec 18 31 Dec 14 31 Dec 14 31 Dec 14 31 Dec 14 31 Dec 18 31 Dec 18 31 Dec 12 31 Dec 19 31 Dec 16 1 1 16 Feb 15 1 Jan 16 1 1 Jan 17 - - - - 1 1 1 1 16 Feb 15 1 Jan 16 1 Jan 17 1 Jan 16 1 Jan 15 - - - - - - - - - - 250,000 1,500,000 200,000 200,000 - - - - 33,334 - - - - - 1 Closing share price must exceed exercise price for 10 consecutive trading days after the vesting date. All options expire on the earlier of their expiry date or termination of the employee’s employment. These options do not entitle the holder to participate in any share issue of the Company. As none of the options held by Mr Edgar (as shown in the above table) have vested, all of those options will expire on cessation of his employment on 18 September 2015. Table 5: Shares issued on exercise of options There was no exercise of compensation options during the reporting period. Table 6: Value of options granted, exercised and lapsed during the year Value of options granted during the year $ Value of options exercised during the year $ Value of options lapsed during the year $ Directors K Wilson G McDermott J Dorward C H Naylor Executives W Edgar J Nosworthy - - - - - - - - - - - - 34,686 120,450 27,749 27,749 - - For details on the valuation of options, including models and assumptions used, please refer to Note 21 to the consolidated financial statements. 26 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.9 Additional disclosures relating to shares and options Movement in shares The movement during the reporting period in the number of ordinary shares in Navarre Minerals Limited held directly, indirectly or beneficially, by key management personnel, including their related parties, is as follows: 30 June 2015 Held at 1 July 2014 Purchases Received on Exercise of Options Sales Held at 30 June 2015 Shares held in Navarre Minerals Limited (number) Directors K Wilson G McDermott J Dorward C H Naylor Executives W Edgar J Nosworthy 4,697,944 5,055,013 3,585,770 1,960,770 1,174,487 1,363,333 643,943 490,193 319,105 100,000 280,895 25,000 Options over equity instruments - - - - - - - - - - - - 5,872,431 6,418,346 4,229,713 2,450,963 600,000 125,000 The movement during the reporting period in the number of options over ordinary shares in Navarre Minerals Limited held, directly, indirectly and beneficially by key management personnel, including their related parties is as follows: Held at 1 July 2014 Granted as Remuneration Options Exercised Options Lapsed Held at 30 June 2015 Vested in 2015 Vested and exercisable at 30 June 2015 Options held in Navarre Minerals Limited (number) Directors K Wilson G McDermott J Dorward C H Naylor Executives W Edgar J Nosworthy 550,000 1,750,000 450,000 450,000 - 100,000 - - 250,000 425,000 100,000 100,000 9.10 Company performance - - - - - - 250,000 1,500,000 200,000 200,000 300,000 350,000 250,000 250,000 - - - - - - - - - - 350,000 525,000 - 33,334 - 100,000 The remuneration of executives and consultants is not linked to financial performance measures of the Company, with the exception of the Managing Director and the Exploration Manager who have long-term incentives linked to improvements in the Company’s share price over the course of the calendar year. 27 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 9. REMUNERATION REPORT (Audited) (cont.) 9.10 Company performance (cont.) In accordance with Section 300A of the Corporations Act 2001, the following table summarises Navarre’s performance over a two year period: Net profit/(loss) - $000 Basic earnings/(loss) per share – cents per share Share price at the beginning of year - $ Share price at end of year - $ Dividends per share – cents 2015 (505) (0.65) 0.069 0.024 Nil 2014 (603) (0.94) 0.045 0.069 Nil 2013 (611) (0.79) 0.15 0.045 Nil 2012 (843) (1.57) 0.26 0.15 Nil 10. CORPORATE GOVERNANCE STATEMENT *** End of Remuneration Report *** The Company’s Corporate Governance Statement for the year ended 31 July 2015, ASX Appendix 4G (Key to Disclosure of Corporate Governance Principles and Recommendations) and other ancillary corporate governance related documents may be accessed from the Company’s website at http://www.navarre.com.au/corporate-governance. Signed in accordance with a resolution of the Directors made pursuant to s298(2) of the Corporations Act 2001. On behalf of the Directors G McDermott Managing Director Stawell, 15 September 2015 28 Navarre Minerals Limited ABN 66 125 140 105 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015 Interest income Income Net administration expenses Exploration expenditure written-off Loss before income tax Income tax expense Net loss for the period Other comprehensive income Net fair value gain on available-for-sale financial assets Other comprehensive income for the period, net of tax Total comprehensive loss for the period Basic loss per share (cents per share) Diluted loss per share (cents per share) Note 4 5 6 6 2015 $ 20,961 20,961 2014 $ 43,353 43,353 (523,300) (3,005) (539,633) (106,402) (505,344) (602,682) - - (505,344) (602,682) 40,000 40,000 - - (465,344) (602,682) (0.65) (0.65) (0.94) (0.94) The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. 29 Navarre Minerals Limited ABN 66 125 140 105 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other financial assets Available-for-sale financial assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other financial assets Property, plant and equipment Leasehold improvements Exploration and evaluation costs TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provisions TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Share based payments reserve Net unrealised gains reserve Accumulated losses TOTAL EQUITY Note 7 8 9 10 9 11 12 13 14 15 16 16 16 16 2015 $ 498,039 62,721 - 105,000 665,760 2014 $ 1,207,176 49,406 10,000 - 1,266,582 40,000 56,025 1,308 5,957,382 6,054,715 30,000 116,845 2,829 5,222,334 5,372,008 6,720,475 6,638,590 179,908 26,051 205,959 195,894 45,345 241,239 205,959 241,239 6,514,516 6,397,351 9,707,084 97,109 40,000 (3,329,677) 9,129,833 302,485 - (3,034,967) 6,514,516 6,397,351 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 30 Navarre Minerals Limited ABN 66 125 140 105 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015 Issued Capital Share Based Payments Reserve $ $ Net Unrealised Gains Reserve $ Accumulated Losses Total Equity $ $ Balance at 1 July 2014 9,129,833 302,485 Net loss for the period Other comprehensive income Total comprehensive loss for the year Transactions with owners in their capacity as owners: Cost of share based payments Share issues Costs of issues - - 599,178 (21,927) - - (3,034,967) 6,397,351 (505,344) (505,344) - 40,000 - 40,000 40,000 (505,344) (465,344) 5,258 - - - - - - - - - 5,258 599,178 (21,927) 210,634 - Transfer of equity instruments lapsed - (210,634) At 30 June 2015 9,707,084 97,109 40,000 (3,329,677) 6,514,516 Issued Capital Share Based Payments Reserve $ $ Net Unrealised Gains Reserve $ Balance at 1 July 2013 8,303,049 265,501 Net loss for the period Total comprehensive loss for the year Transactions with owners in their capacity as owners: Cost of share based payments - 40,684 Share issues Costs of issues 844,000 (17,216) - - Transfer of equity instruments lapsed - (3,700) At 30 June 2014 9,129,833 302,485 - - - - - - - - Accumulated Losses Total Equity $ $ (2,435,985) 6,132,565 (602,682) (602,682) (602,682) (602,682) - - - 40,684 844,000 (17,216) 3,700 - (3,034,967) 6,397,351 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 31 Navarre Minerals Limited ABN 66 125 140 105 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015 CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest received 2015 $ 2014 $ (460,958) 22,803 (617,462) 42,624 Net cash (used in) operating activities (Note 17) (438,155) (574,838) CASH FLOWS FROM INVESTING ACTIVITIES Expenditure on plant and equipment Proceeds from sale of plant and equipment Expenditure on exploration tenements Research and development tax incentive Expenditure associated with research and development tax incentive - - (845,814) - - (43,569) 25,546 (818,458) 1,432,954 (214,943) Net cash (used in) / from investing activities (845,814) 381,530 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issues Transaction costs on issue of shares Net cash from financing activities 599,178 (24,346) 844,000 (14,797) 574,832 829,203 Net (decrease) / increase in cash and cash equivalents (709,137) 635,895 Cash and cash equivalents at beginning of period 1,207,176 571,281 Cash and cash equivalents at end of period (Note 7) 498,039 1,207,176 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 32 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 1: CORPORATE INFORMATION The financial report of Navarre Minerals Limited (“Navarre Minerals”, or the “Company”) for the year ended 30 June 2015 was authorised for issue in accordance with a resolution of the directors on 15 September 2015. Navarre Minerals Limited is a company limited by shares incorporated in Australia. The Company’s shares are publicly traded on Australian Stock Exchange. The nature of operations and principal activities of the Group are described in Note 3. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board, and is presented in Australian dollars. The financial report has also been prepared on a historical cost basis. (i) Compliance with IFRS The financial report complies with Australian Accounting Standards issued by the Australian Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. (ii) Early adoption of new Accounting Standards The Group has not elected to early adopt any of the standards set out under (c) New Accounting Standards for Application in Future Periods. (iii) Historical cost convention The financial statements have been prepared under a historical cost convention. (b) New Accounting Standards and Interpretations The Group has adopted the following amended Australian Accounting Standard and AASB Interpretation as of 1 July 2014. Adoption of these standards did not have a material effect on the financial position or performance of the Group. Standard Summary 136 AASB 2013-3 Amendments to AASB Recoverable – Amount Disclosures for Non- Financial Assets This Standard amends the disclosure requirements in AASB 136 to include additional disclosures about the fair value measurement and discount rates when the recoverable amount of impaired assets is based on fair value less costs of disposal. AASB 2013-9B Amendments to Accounting Australian Standards Conceptual – Framework, Materiality and Financial Instruments Part B of 2013-9 makes amendments to particular Australian Accounting Standards to delete references to AASB 1031, and makes various editorial corrections to Australian Accounting Standards. AASB 1031 Materiality Re-issuance of AASB 1031 33 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) (c) New Accounting Standards for Application in Future Periods The following standards and interpretations have been issued by the AASB but are not yet effective for the period ending 30 June 2015. Adoption of these standards is not expected to have a material effect on the financial position or performance of the Group however the position will be further reviewed during FY2015 – 2016. Reference Title Summary AASB 2015-3 AASB 2014-3 AASB 2014-4 Amendments to Australian Accounting Standards arising from the withdrawal of AASB 1031 Materiality This Standard completes the AASB’s project to remove Australian guidance on materiality from Australian Accounting Standards. to Australian Amendments Accounting – Standards Accounting for Acquisitions of Interests in Joint Operations This Standard amends AASB 11 to provide guidance on the accounting for acquisitions of interests in joint operations in which the activity constitutes a business. to Australian Amendments Standards – Accounting Clarification of Acceptable Methods of Depreciation and Amortisation AASB 2014-10 to Australian Amendments Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture AASB 2015-2 Amendments Accounting Disclosure Amendments to AASB 101 to Australian – Standards Initiative: This Standard amends AASB 116 and AASB 138 to establish the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset, and to clarify that revenue is generally presumed to be an inappropriate basis for that purpose. This amending Standard requires a full gain or loss to be recognised when a transaction involves a business (even if the business is not housed in a subsidiary), and a partial gain or loss to be recognised when a transaction involves assets that do not constitute a business (even if those assets are housed in a subsidiary). This Standard makes amendments to AASB 101 Presentation of Financial Statements arising from the IASB’s Disclosure Initiative project. Application date of standard Application date for Group 1 July 2015 1 July 2015 1 January 2016 1 July 2016 1 January 2016 1 July 2016 1 January 2016 1 July 2016 1 January 2016 1 July 2016 Other new Australian accounting standards and Interpretations issued by not yet effective are not relevant to the Group. (d) Basis of consolidation The consolidated financial statements comprise the financial statements of Navarre Minerals Limited and its subsidiaries as at 30 June 2015 and the results of all the subsidiaries for the year then ended (“Group”). Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from their activities. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income, expenses and profit and losses from intra group transactions, have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. (e) Significant accounting judgements, estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on judgements, estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: 34 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) (e) Significant accounting judgements, estimates and assumptions (cont.) Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options is determined using either a Black Scholes or binomial option pricing model, and using the assumptions detailed in Note 21. Exploration and evaluation costs Exploration and evaluation costs are accumulated separately for each area of interest and carried forward provided that one of the following conditions is met:   such costs are expected to be recouped through successful development or sale; or exploration activities have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in relation to the area are continuing. Significant judgement is required in determining whether it is likely that future economic benefits will be derived from the capitalised exploration and evaluation expenditure. In the judgement of the Directors, at 30 June 2015, exploration activities in each area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of ore reserves. Active and significant operations in relation to each area of interest are continuing and nothing has come to the attention of the Directors to indicate future economic benefits will not be achieved. The Directors are continually monitoring the areas of interest and are exploring alternatives for funding the development of areas of interest when ore reserves are confirmed. If new information becomes available that suggests the recovery of expenditure is unlikely, the amounts capitalised will need to be reassessed at that time. R&D Tax Incentive Refund The Group is awaiting the outcome of an examination of the Company’s registration for the Federal Government’s Research and Development (“R&D”) Tax Incentive Program (“Program”) in respect of activities conducted by the Company in the 2011/12 and 2012/13 financial years as part of its work programs. The examination will be conducted by AusIndustry, a government agency responsible for administering the Program, and follows on from a review by AusIndustry of the activities registered by the Company under the Program. The Company received a tax refund of $1.4 million (“Refund”) in respect of R&D activities conducted by the Company in the 2011/12 financial year. In 2014, AusIndustry undertook a Compliance Activity Review of the Company’s registration under the program. An Activity Review Meeting was conducted by AusIndustry in July 2014 and the Company responded to a request for additional information. In December 2014, AusIndustry notified the Company that the registration remained under review and was considered to have a high-risk of non-compliance with the eligibility requirements of the Program. The Company submitted to AusIndustry additional information and evidence in support of its claimed R&D activities. In September 2015, AusIndustry notified the Company of its intention to commence an examination of the Company’s registration for the Program under section 27F of the Industry Research and Development Act 1986 (Cth). The examination involves an assessment of the eligibility of the claimed R&D activities and will lead to a finding being made about the eligibility of those activities under the requirements of the Program. The Company intends to respond to the outstanding issues identified by AusIndustry and make further submissions for consideration by AusIndustry during the examination of the registration. Taking into account advice from the Company’s R&D tax consultant and the views of management, the Directors and the Company’s R&D tax consultant believe the Company’s R&D registration is in compliance with the requirements of the Program. However, there is a risk that AusIndustry may disagree with the Company’s assessment of the eligibility of its R&D activities and make a finding that some or all registered activities are ineligible under the Program. In the event of an adverse finding, the Company would pursue all available avenues for appeal. Even if the Company pursues avenues of appeal, there remains a risk that the Company may be required to repay to the Australian Taxation Office (“ATO”) some or all of the Refund, in which case the Company may be required to draw on its cash reserves and/or may require additional capital in order to meet that liability to the ATO. (f) Cash and cash equivalents Cash and cash equivalents in the consolidated statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. 35 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) (g) Investment and Other Financial Assets Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either financial assets at fair value through profit and loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired or originated. Designation is re-evaluated at each reporting date, but there are restrictions on reclassifying to other categories. When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs. Available-for-sale (AFS) Financial Investments AFS financial investments include equity investments and debt securities. Equity investments classified as AFS are those that are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in the market conditions. After initial measurement, AFS financial investments are subsequently measured at fair value with unrealised gains or losses recognised as Other Comprehensive Income (OCI) and credited in the net unrealised gains reserve until the investment is de-recognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the net unrealised gains reserve to the statement of profit or loss. The Group evaluates whether the ability and intention to sell its AFS financial assets in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets, the Group may elect to reclassify these financial assets if management has the ability and intention to hold the assets for the foreseeable future or until maturity. Impairment of Financial Assets The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. (h) Plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets which range from 3 to 5 years. Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash- generating unit to which the asset belongs. Impairment exists when the carrying value of an asset exceeds its estimated recoverable amount. The asset is written down to its recoverable amount. The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated statement of comprehensive income in the period the item is derecognised. 36 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) (i) Exploration and evaluation costs Exploration and evaluation expenditure is carried at cost. If indication of impairment arises, the recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount. Exploration and evaluation costs are accumulated separately for each current area of interest and carried forward provided that one of the following conditions is met:   such costs are expected to be recouped through successful development or sale; or exploration activities have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in relation to the area are continuing. Impairment of exploration and evaluation costs To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits/ (losses) and net assets will be varied in the period in which this determination is made. Farm-outs The Group will account for farm-out arrangements as follows:    The Group will not record any expenditure made by the farminee on its behalf; The Group will not recognise a gain or loss on the farm-out arrangement but rather will redesignate any costs previously capitalised in relation to the whole interest as relating to the partial interest retained; and Any cash consideration to be received will be credited against costs previously capitalised in relation to the whole interest with any excess to be accounted for by the Group as gain on disposal. (j) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance date which are classified as non-current assets. Loans and receivables are included in receivables in the consolidated statement of financial position. Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade date, the date on which the Group commits to purchase or sell the asset. Subsequent measurement Loans and receivables are carried at amortised cost using the effective interest method. Impairment The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. (k) Leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use a specific asset or assets and the arrangement conveys a right to use the asset. Leases under which the lessor retains substantially all of the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised in the consolidated statement of comprehensive income on a straight-line basis over the lease term. (l) Trade and other payables Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of the goods and services. 37 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) (m) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statement of comprehensive income net of any reimbursement. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance date. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs. Employee leave benefits Wages, salaries, annual leave and sick leave Liabilities for wage and salaries, including non-monetary benefits and annual leave entitlements expected to be settled within 12 months of the reporting date are recognised in provisions in respect of employees’ service up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non- accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date in national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (n) Share-based payment transactions The Group provides benefits to employees and directors of the Group in the form of share-based payment transactions, whereby services are rendered in exchange for shares or rights over shares (‘equity-settled transactions’). The cost of equity-settled transactions is measured by reference to the fair value at the date at which they are granted. The fair value of options is determined using either a Black Scholes or binomial option pricing model. The fair value of options with non-market performance criteria is determined by reference to the Company’s share price at date of grant. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the recipient becomes fully entitled to the award (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors, based on the best available information at balance date, will ultimately vest. No adjustment is made for the likelihood of market conditions being met as the effect of these conditions is included in determination of fair value at grant date. The charge or credit for the period represents the movement in cumulative expense recognised as at the beginning and end of the period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. 38 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) (n) Share-based payment transactions (cont.) Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share. (o) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (p) Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Specific recognition criteria must also to be met: Interest income Revenue is recognised as the interest accrues using the effective interest method. (q) Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the reporting date. Deferred income tax is provided on all temporary differences at balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences, except:   where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be used, except:   where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and when the deductible temporary differences is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be applied. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it is has become probable that future taxable profit will allow the deferred tax asset to be recovered. 39 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) (q) Income tax (cont.) Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right of set off exists to set off current tax assets against current liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxable authority. Income taxes relating to items recognised directly in equity are recognised in equity and not in the consolidated statement of comprehensive income. (r) Goods and services tax Revenues, expenses and assets are recognised net of GST, except receivables and payables which are stated with GST included. Where GST incurred on a purchase of goods or services is not recoverable from the taxation authority, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statement of financial position. Cash flows are included in the consolidated statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (s) Earnings per share Basic earnings per share is calculated as net profit/(loss) attributable to members divided by the weighted average number of ordinary shares. Diluted earnings per share is calculated as net profit/(loss) attributable to members divided by the weighted average number of ordinary shares and dilutive potential ordinary shares. (t) Going concern The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation and settlement of liabilities in the normal course of the business. The Group incurred a loss of $505,344 and had net cash outflows from operating and investing activities of $438,155 and $845,814, respectively, and net cash inflows from financing activities of $574,832, for the year ended 30 June 2015. The Group’s cash reserves have decreased from $1,207,176 as at 30 June 2014 to $498,039 as at 30 June 2015. The Directors believe that there are reasonable grounds to believe that the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors: (i) (ii) The Group will seek to raise further capital, if required, as and when necessary to meet its projected operations. The decision of how the Group will raise future capital will depend on market conditions existing at that time. It is the Group’s plan that this capital will be raised by any one or a combination of the following: placement of shares, pro-rata issue to shareholders, the exercise of outstanding options, and/or a further issue of shares to the public. Should these methods not be considered to be viable, or in the best interests of shareholders, then it would be the Group’s intention to meet its obligations by either sale of all or part of the Group’s interests or farm-out of the Group’s exploration interests, the latter course of action being part of the Group’s current overall strategy. Based on the above, the Directors are of the opinion that the Group will be able to continue as a going concern and the use of the going concern basis of accounting is appropriate. 40 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) (u) Parent entity financial information The financial information for the parent entity, Navarre Minerals Limited, disclosed in Note 23 has been prepared on the same basis as the consolidated financial statements, except as set out below. Investments in subsidiaries Investments in subsidiaries are accounting for at cost less accumulated impairment losses in the financial statements of Navarre Minerals Limited. NOTE 3: SEGMENT INFORMATION The Group’s reportable segment is confined to mineral exploration only. NOTE 4: NET ADMINISTRATION EXPENSES Consolidated 2015 $ 2014 $ 12,440 109,500 629,354 5,258 30,737 15,663 24,720 35,559 3,553 50,393 63,715 980,892 (457,592) 14,858 109,325 734,756 40,684 65,276 15,222 23,967 35,310 11,036 58,661 62,710 1,171,805 (632,172) 523,300 539,633 Consolidated 2015 $ 2014 $ 149,961 (149,961) - (198,509) 198,509 - 168,500 (168,500) - (287,359) 287,359 - - - Net administration expenses Consultants fees and expenses Directors remuneration (non-executive) Salaries and on-costs Share based payments Investor relations Motor vehicle expenses Audit costs Stock exchange registry and reporting costs Travel costs Depreciation and amortisation Other administration expenses Gross administration expenses Allocated to exploration licences Net administration expenses NOTE 5: INCOME TAX Statement of Comprehensive Income Current income tax Current income tax credit Tax losses not recognised as probable Deferred income tax Relating to origination and reversal of temporary differences Tax losses brought to account offsetting reversal of temporary differences Income tax expense reported in the consolidated statement of comprehensive income 41 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 5: INCOME TAX (cont.) Consolidated 2015 $ 2014 $ Tax Reconciliation A reconciliation between tax expense and the product of accounting loss before income tax multiplied by the Group’s applicable income tax rate is as follows: Accounting loss before tax At the statutory 30% tax rate (2014: 30%) Share based payment expense Non-deductible expenses Tax losses not brought to account Income tax expense reported in the consolidated statement of comprehensive income (505,344) (602,682) 151,603 (1,577) (65) (149,961) 180,805 (12,205) (100) (168,500) - - Deferred Income Tax Statement of Financial Position 2015 $ 2014 $ Income Statement 2015 $ 2014 $ Deferred income tax at 30 June relates to the following: CONSOLIDATED Deferred tax liabilities Interest receivable Exploration and evaluation costs Gross deferred income tax liabilities Deferred tax assets Accruals Provisions Share issue costs Temporary differences not recognised as not probable Tax losses brought to account to offset net deferred tax liability Gross deferred income tax assets Net Deferred Tax Asset Deferred tax expense Tax consolidation (i) Members of the tax consolidated group (355) (1,787,215) (1,787,570) (908) (1,566,700) (1,567,608) 553 (220,515) (219) (264,003) 39,856 7,815 6,578 12,615 13,604 5,165 27,241 (5,789) - (26,762) 3,625 - (6,578) (5,165) - - 1,739,899 1,787,570 - 1,541,389 1,567,608 - 198,510 287,359 - - Navarre Minerals Limited and its 100% owned Australian resident subsidiary formed a tax consolidated group with effect from 2 May 2012. Navarre Minerals Limited is the head entity of the tax consolidated group. (ii) Tax effect accounting by members of the tax consolidated group Measurement method adopted under UIG 1052 Tax Consolidated Accounting The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the principles in AASB 112 Income Taxes. 42 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 5: INCOME TAX (cont.) In addition to its own current and deferred tax amounts, the head entity also recognises current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Tax losses At balance date, the Group has estimated unused gross tax losses of $10,847,000 (2014: $9,577,000) that are available to offset against future taxable profits subject to continuing to meet relevant statutory tests. To the extent that it does not offset a net deferred tax liability, a deferred tax asset has not been recognised in the accounts for these unused losses because it is not probable that future taxable profit will be available to use against such losses. NOTE 6: EARNINGS/(LOSS) PER SHARE Basic earnings/(loss) per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings/(loss) per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. For the year ended 30 June 2015 and for the comparative period, there are no dilutive potential ordinary shares as conversion of share options and performance rights would decrease the loss per share and hence are non-dilutive. The following data was used in the calculations of basic and diluted loss per share: Net loss Weighted average number of ordinary shares used in calculation of basic and diluted loss per share Consolidated 2015 $ (505,344) 2014 $ (602,682) Shares Shares 77,328,237 63,933,675 There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these consolidated financial statements. NOTE 7: CASH AND CASH EQUIVALENTS Cash at bank and in hand Cash at bank earns interest at floating rates based on daily bank rates. NOTE 8: TRADE AND OTHER RECEIVABLES Goods and services tax refund Interest receivable Other Consolidated 2015 $ 498,039 2014 $ 1,207,176 498,039 1,207,176 Consolidated 2015 $ 40,571 1,184 20,966 2014 $ 23,881 3,026 22,499 62,721 49,406 At balance date, there are no trade receivables that are past due but not impaired. Due to the short term nature of these receivables, their carrying value approximates fair value. Trade receivables are non-interest bearing and are generally on 30-90 day terms. Details regarding the credit risk of current receivables are disclosed in Note 18. 43 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 9: OTHER FINANCIAL ASSETS Current Term Deposit Non-current Bank Guarantees – Exploration Permits NOTE 10: AVAILABLE-FOR-SALE FINANCIAL ASSETS At fair value Shares – Australian listed Consolidated 2015 $ - 2014 $ 10,000 - 10,000 Consolidated 2015 $ 40,000 2014 $ 30,000 40,000 30,000 Consolidated 2015 $ 105,000 105,000 2014 $ - - Available-for-sale financial assets consist of investment in ordinary shares, and therefore have no fixed maturity date or coupon rate. Listed Shares The Available-for-sale financial asset is an investment of shares in a listed company. The fair value of the equity shares is determined by reference to published price quotations in an active market. NOTE 11: PROPERTY, PLANT AND EQUIPMENT At cost Accumulated depreciation Movement in Plant and Equipment Net carrying amount at beginning of year Additions Disposals [net written down value] Depreciation Net carrying amount at end of year The useful life of the plant and equipment is estimated for 2015 as 3 to 5 years. Consolidated 2015 $ 233,926 (177,901) 2014 $ 259,153 (142,308) 56,025 116,845 116,845 - (11,948) (48,872) 154,147 43,568 (23,729) (57,141) 56,025 116,845 44 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 12: LEASEHOLD IMPROVEMENTS At cost Accumulated depreciation Movement in Leasehold Improvements Net carrying amount at beginning of year Depreciation Net carrying amount at end of year The useful life of the Leasehold Improvements is estimated as 5 years. NOTE 13: EXPLORATION AND EVALUATION COSTS Balance at beginning of year Expenditure for the year Expenditure written-off during the year Cash consideration paid by Catalyst Metals Ltd as part of Bendigo North farm-out Non-cash consideration paid by Catalyst Metals Ltd as part of Bendigo North farm-out Consolidated 2015 $ 7,602 (6,294) 2014 $ 7,602 (4,773) 1,308 2,829 2,829 (1,521) 4,349 (1,520) 1,308 2,829 Consolidated 2015 $ 5,222,334 853,053 (3,005) (50,000) (65,000) 2014 $ 4,342,324 986,412 (106,402) - - 5,957,382 5,222,334 Capitalised exploration and evaluation costs at 30 June 2015 are $5,957,382 (2014: $5,222,334) which relate to Bendigo North $3,332,215 (2014: $3,435,042), Western Victoria Copper Project $1,543,801 (2014: $1,358,649), Kingston $426,058 (2014: $423,687) and Stawell Corridor $655,308 (2014: $4,956). NOTE 14: TRADE AND OTHER PAYABLES Trade Creditors Trade payables are non-interest bearing and are normally settled on 30 day terms. NOTE 15: PROVISIONS CURRENT Annual leave entitlement Consolidated 2015 $ 179,908 2014 $ 195,894 Consolidated 2015 $ 26,051 2014 $ 45,345 45 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 16: CONTRIBUTED EQUITY AND RESERVES ISSUED AND PAID UP CAPITAL Ordinary shares 2015 Shares Consolidated 2015 $ 2014 Shares 2014 $ 92,580,272 92,580,272 9,707,084 9,707,084 72,607,653 72,607,653 9,129,833 9,129,833 Movements in Ordinary Shares Balance at beginning of year Share Issues: Share placement at $0.03 Entitlement offer and shortfall placement at $0.03 Transaction costs 72,607,653 9,129,833 59,622,973 8,303,049 5,833,333 14,139,286 - 175,000 424,178 (21,927) 4,615,384 8,369,296 - 300,000 544,000 (17,216) Balance at end of year 92,580,272 9,707,084 72,607,653 9,129,833 (a) Terms and Condition of Ordinary Shares Ordinary shares entitle their holder to receive dividends as declared. In the event of winding up the Company, ordinary shares entitle their holder to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up or which should have been paid up on shares held. Each ordinary share entitles the holder to one vote, either in person or by proxy, at a meeting of the Company. Ordinary shares issued during the year and since the end of the year, from date of issue rank equally with the ordinary shares on issue. (b) Share Options At 30 June 2015 2,250,000 options over unissued shares granted to non-executive directors and senior employees were outstanding. The options are granted pursuant to the Navarre Minerals Limited Option Plan, details of which are set out in Note 21. (c) Capital Management Capital is defined as equity. When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits of other stakeholders. All methods of returning funds to shareholders outside of dividend payments or raising funds are considered within the context of the Group’s objectives. The Group will seek to raise further capital, if required, as and when necessary to meet its projected operations. The decision of how the Group will raise future capital will depend on market conditions existing at that time. It is the Group’s plan that this capital will be raised by any one or a combination of the following: placement of shares, pro-rata issue to shareholders, the exercise of outstanding options, and/or a further issue of shares to the public. Should these methods not be considered to be viable, or in the best interests of shareholders, then it would be the Group’s intention to meet its obligations by either partial sale of the Group’s interests or farm-out, the latter course of action being part of the Group’s overall strategy. The Group is not subject to any externally imposed capital requirements. OTHER RESERVES Share Based Payments Reserve The share based payments reserve records the value of benefits provided as equity instruments to directors, employees and consultants under share-based payment plans (Note 21). Balance at beginning of year Cost of share based payments Cost of expired equity instruments transferred to accumulated losses Balance at end of year 46 Consolidated 2015 $ 302,485 5,258 (210,634) 2014 $ 265,501 40,684 (3,700) 97,109 302,485 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 16: CONTRIBUTED EQUITY AND RESERVES (cont.) Net unrealised gains reserve Balance at beginning of year Net fair value gain on available-for-sale financial assets Balance at end of year ACCUMULATED LOSSES Balance at beginning of year Net loss for the year Cost of equity instruments expired Balance at end of year NOTE 17: STATEMENT OF CASH FLOWS RECONCILIATION Reconciliation of net loss after tax to net cash flows used in operating activities Net loss Adjustments for: Gain on sale of property, plant and equipment Loss on property, plant and equipment written-off Exploration expenditure written-off Depreciation and amortisation (net of allocation to exploration licences) Share based payments (net of allocation to exploration licences) Changes in assets and liabilities (Increase) in trade and other receivables (Decrease)/increase in trade and other payables (Decrease)/Increase in provisions (net of allocation to exploration licences) Consolidated 2015 $ - 40,000 40,000 2014 $ - - - Consolidated 2015 $ (3,034,967) (505,344) 210,634 2014 $ (2,435,985) (602,682) 3,700 3,329,677 (3,034,967) Consolidated 2015 $ (505,344) 2014 $ (602,682) - 11,948 3,005 4,529 (2,141) 324 106,403 5,668 5,975 24,212 (16,763) 68,572 (10,077) (9,946) (101,661) 4,985 Net cash flows used in operating activities (438,155) (574,838) NOTE 18: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s principal financial instruments comprise cash and short term deposits, the main purpose of which is to finance the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. The main risks arising from the Group’s financial instruments are credit risk, interest rate risk and liquidity risk. The Board of Directors has reviewed each of those risks and has determined that they are not significant in terms of the Group’s current activities. Credit risk The Group trades only with recognised, creditworthy third parties. Receivable balances are monitored on an ongoing basis with the results being that the Group’s exposure to bad debts is not significant. Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and other receivables. The Group's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. No collateral is held as security. Exposure at balance date is the carrying value as disclosed in each applicable note. 47 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 18: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont.) Interest rate risk The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s cash and cash equivalents with a floating interest rate. The impact of a 1.0% change in the market interest rates will not have a material impact on the Group’s financial position. There is no impact on equity other than the above net profit sensitivities on retained earnings/accumulated losses. Liquidity Risk The Group’s exposure to financial obligations relating to corporate administration and projects expenditure, are subject to budgeting and reporting controls, to ensure that such obligations do not exceed cash held and known cash inflows for a period of at least 1 year. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built in an appropriate liquidity risk framework for the management of the Group’s short, medium and longer term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate equity funding through the monitoring of future cash flow forecasts of its operations, which reflect management’s expectations of the settlement of financial assets and liabilities. The Group has limited financial resources and will need to raise additional capital from time to time as such fund raisings will be subject to factors beyond the control of the Group and its directors. When Navarre requires further funding for its programs, then it is the Group’s intention that the additional funds will be raised by any one or a combination of the following: placement of shares, pro-rata issue to shareholders, the exercise of outstanding options, and/or a further issue of shares to the public. Should these methods not be considered to be viable, or in the best interests of shareholders, then it would be the Group’s intention to meet its obligations by either partial sale of the Group’s interests or farm-out, the latter course of action being part of the Group’s overall strategy. Maturity Analysis At balance date, the Group holds $179,908 of financial liabilities consisting of trade and other payables. All financial liabilities have a contractual maturity of 30 days. Fair Values The aggregate net fair values of the financial assets and liabilities are the same as the carrying values in the consolidated statement of financial position. NOTE 19: COMMITMENTS AND CONTINGENCIES (a) Commitments Operating Lease Future minimum rentals payable under operating lease for office premises at balance date: Payable not later than one year Exploration Commitments – Exploration Permits Estimated cost of minimum work requirements contracted for under exploration permit is estimated at balance date: Payable not later than one year Payable later than one year but not later than five years 2015 $ 2014 $ 2,390 2,390 2015 $ 14,340 14,340 2014 $ 455,000 986,800 1,441,800 387,550 884,900 1,272,450 Exploration commitments at 30 June 2015 relate to, Western Victoria Copper Project $803,100 (2014: $1,144,950), Kingston $46,200 (2014: $127,500) and Stawell Corridor $592,500 (2014: $0). 48 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 19: COMMITMENTS AND CONTINGENCIES (cont.) (a) Commitments (cont.) Responsibility for exploration commitments for the Tandarra Gold Project (EL 4897) during the reporting period was assumed by Catalyst Metals Limited under a farm-out agreement, pursuant to which Catalyst may earn a 51% interest in the Tandarra Gold Project. In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements. These obligations are expected to be fulfilled in the normal course of operations. Exploration interests may be relinquished or joint ventured to reduce this amount (as has been done in the case of the Tandarra Gold Project). The Victorian State Government has the authority to defer, waive or amend the minimum expenditure requirements. (b) Contingent Liability R&D Tax Incentive refund The Company received a refund of $1.4 million (“Refund”) from the Federal Government following registration under the government’s Research and Development (“R&D”) Tax Incentive program (“Program”) in respect of R&D activities conducted by the Company in the 2011/12 year as part of its exploration work programs. In 2014, the government agency responsible for administering the Program, AusIndustry, commenced a Compliance Activity Review of the Company’s registration under the Program. An Activity Review Meeting was conducted by AusIndustry in July 2014 and the Company responded to a request for additional information. In December 2014, AusIndustry notified the Company that the Company’s registration remains under review and is considered to have a high risk of non-compliance with the eligibility requirements of the Program. The Company has prepared and submitted to AusIndustry additional information and evidence in support of its claimed R&D activities. In September 2015, AusIndustry notified the Company of its intention to commence an examination of the Company’s registration for the Program under section 27F of the Industry Research and Development Act 1986 (Cth), which involves an assessment of the eligibility of the claimed R&D activities and will lead to a finding being made about the eligibility of those activities under the requirements of the Program. The Company intends to respond to the outstanding issues identified by AusIndustry and make further submissions for consideration by AusIndustry during the examination of the registration. Taking into account advice from the Company’s R&D tax consultant and the views of management, the Directors and the Company’s R&D tax consultant believe the Company’s R&D registration is in compliance with the requirements of the Program. However, there is a risk that AusIndustry may disagree with the Company’s assessment of the eligibility of its claimed R&D activities under the Program and make a finding that some or all activities are ineligible under the Program. In the event of an adverse finding, the Company would pursue all available avenues for appeal. Even if the Company pursues those avenues of appeal there remains a risk that the Company may be required to repay to the Australian Taxation Office (ATO) some or all of the Refund, in which case the Company may be required to draw on its cash reserves and/or may require additional capital in order to meet that liability to the ATO. 49 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 20: RELATED PARTY DISCLOSURES Subsidiaries The consolidated financial statements include the financial statements of Navarre Minerals Limited and the following subsidiary: Black Range Metals Pty Ltd Compensation of key management personnel by category: Short term employee benefits Post-employment benefits Share-based payments Country of Incorporation Australia % Entity Interest 2014 % 100 2015 % 100 Consolidated 2015 $ 613,097 75,856 8,778 697,731 2014 $ 628,025 79,131 31,622 738,778 Details of compensation of individual key management personnel are set out in the Remuneration Report. During the year, no fees for consulting services were paid by the Group to entities controlled by directors. NOTE 21: SHARE BASED PAYMENT PLANS Navarre Minerals Limited Option Plan Share options may be granted to senior employees and non-executive directors under the Navarre Minerals Limited Option Plan. There were 350,000 options granted to senior employees during the financial year (2014: 275,000 options). Movements in share options on issue during the year: Outstanding at the beginning of the year Granted during the year Lapsed during the year Exercised during the year 2015 Options 4,215,000 350,000 (2,315,000) - 2,250,000 2014 Options 4,190,000 275,000 (250,000) - 4,215,000  On 16 February 2015, 200,000 share options were granted to senior employees of the Company. The options are exercisable at a price of 10 cents per option on or before 31 December 2018. The options vest in three tranches, when the Company’s closing share price exceeds the exercise price of the options for ten consecutive trading days after the relevant vesting date (being 16 February 2015 for the first tranche, 1 January 2016 for the second tranche and 1 January 2017 for the third tranche). The fair value of the options at date of grant is estimated to be 0.29 cents for the first tranche, 0.55 cents for the second tranche and 0.75 cents for the third tranche. The fair value was determined using a Binomial pricing model, taking into account the terms and conditions upon which the options were granted, and using the following inputs to the model: Expected volatility Risk-free interest rate 70% Contractual life 2.68% Dividend yield 4 years 0% The total amount expensed in the year relating to these share options was $0. The effects of early exercise have been incorporated into the calculations by using an expected life for the option that is shorter than the contractual life based on historical exercise behaviour, which is not necessarily indicative of exercise patterns that may occur in the future. 50 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 21: SHARE BASED PAYMENT PLANS (cont.)  On 23 June 2015, 150,000 share options were granted to senior employees of the Company. The options are exercisable at a price of 4 cents per option on or before 31 December 2019. The options vest when the Company’s closing share price exceeds the exercise price of the options for ten consecutive trading days after vesting date (being 1 January 2016). The fair value of the options at date of grant is estimated to be 0.87 cents. The fair value was determined using a Binomial pricing model, taking into account the terms and conditions upon which the options were granted, and using the following inputs to the model: Expected volatility Risk-free interest rate 70% Contractual life 2.68% Dividend yield 5 years 0% The total amount expensed in the year relating to these share options was $0. The effects of early exercise have been incorporated into the calculations by using an expected life for the option that is shorter than the contractual life based on historical exercise behaviour, which is not necessarily indicative of exercise patterns that may occur in the future. NOTE 22: AUDITOR’S REMUNERATION Amounts received or due and receivable by the auditor for: Audit or review of the financial reports: RSM Bird Cameron Partners NOTE 23: PARENT ENTITY INFORMATION Information relating to Navarre Minerals Limited Current assets Total assets Current liabilities Total liabilities Issued capital Share based payment reserve Net unrealised gains reserve Accumulated losses Total shareholders’ equity (Loss) of the parent entity Total comprehensive (loss) of the parent entity Details of any guarantees entered into by the parent entity in relation to the debts of its subsidiaries Details of any contingent liabilities of the parent entity Details of any contractual commitments by the parent entity for the acquisition of property, plant or equipment Consolidated 2015 $ 2014 $ 24,720 24,720 23,967 23,967 2015 $ 2014 $ 971,710 6,730,309 205,959 205,959 9,707,084 97,109 40,000 (3,319,843) 6,524,350 (505,101) (465,101) 1,495,576 6,648,180 241,238 241,238 9,129,833 302,485 - (3,025,376) 6,406,942 (602,345) (602,345) n/a n/a n/a n/a n/a n/a 51 Navarre Minerals Limited ABN 66 125 140 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 NOTE 24: EVENTS SUBSEQUENT TO BALANCE DATE In accordance with the terms of Navarre’s agreement with Catalyst as described in paragraph 4.4(d) above, Catalyst is required to issue a further 250,000 Catalyst shares to Navarre. It has been agreed between Navarre and Catalyst that those shares will be issued on 21 September 2015. In September 2015, AusIndustry notified the Company of its intention to commence an examination under section 27F of the Industry Research and Development Act 1986 (Cth) of the Company’s registration for the Federal Government’s Research & Development (“R&D”) Tax Incentive program (“Program”). The examination will involve an assessment of the eligibility of the R&D activities registered by the Company and will lead to a finding being made about the eligibility of those activities under the requirements of the Program. The Company intends to respond to the outstanding issues identified by AusIndustry and make further submissions for consideration by AusIndustry during the examination of the registration. Other than the above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations, or state of affairs of the Group, in future financial years. 52 Navarre Minerals Limited ABN 66 125 140 105 DIRECTORS’ DECLARATION In accordance with a resolution of the directors of Navarre Minerals Limited, I state that: In the opinion of the Directors: (a) The financial statements and notes of Navarre Minerals Limited for the financial year ending 30 June 2015 are in accordance with the Corporations Act 2001, including: (i) (ii) Giving a true and fair view of the Company’s and the consolidated entity’s financial position as at 30 June 2015. Complying with Accounting Standards (including the Australian Accounting Corporations Regulations 2001. Interpretations) and The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2(a)(i). There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (b) (c) This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2015. On behalf of the Board G McDermott Managing Director Stawell, 15 September 2015 53 RSM Bird Cameron Partners Level 21, 55 Collins Street Melbourne VIC 3000 GPO Box 248 Collins Street West VIC 8007 T +61 3 9286 8000 F +61 3 9286 8299 www.rsmi.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NAVARRE MINERALS LIMITED Report on the Financial Report We have audited the accompanying financial report of Navarre Minerals Limited, which comprises the consolidated statement of financial position as at 30 June 2015, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Liability limited by a scheme approved under Professional Standards Legislation Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036 RSM Bird Cameron Partners is a member of the RSM network. Each member of the RSM network is an independent accounting and advisory firm which practises in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. 54 Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Navarre Minerals Limited, would be in the same terms if given to the directors as at the time of this auditor's report. Opinion In our opinion: (a) the financial report of Navarre Minerals Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2. Report on the Remuneration Report We have audited the Remuneration Report included at pages 18 to 28 of the directors’ report for the year ended 30 June 2015. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion the Remuneration Report of Navarre Minerals Limited for the year ended 30 June 2015 complies with section 300A of the Corporations Act 2001. RSM BIRD CAMERON PARTNERS J S CROALL Partner Dated: 15 September 2015 Melbourne, Victoria 55 Navarre Minerals Limited ABN 66 125 140 105 ADDITIONAL SHAREHOLDER INFORMATION The shareholder information set out below was applicable as at 8 September 2015. 1. Listing Information The Company is listed, and all of the Company’s issued shares are quoted on, the Australian Securities Exchange (ASX). 2. (i) Distribution of Shareholders Analysis of number of shareholders by size of holding: Ranges 1 – 1000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 >100,001 Totals Holders 16 74 146 400 127 783 Total Units 3,545 246,403 1,227,748 13,471,735 77,630,841 92,580,272 % IC 0.004 0.266 1.326 14.551 83.853 100.000 (ii) The number of shareholders holding less than a marketable parcel of shares was 338, holding a total of 2,871,829 shares. 3. 20 Largest Shareholders The following table sets out the top 20 holders of the Company’s shares (when multiple holdings are grouped together by registered holder): Shareholder Crocodile Gold Australia Pty Ltd Mr Kevin John Wilson Mr John Darroch, Mrs Gloria Darroch, Mr Richard Darroch & Ms Helen Darroch New Chum Holdings Pty Ltd Kautag Pty Ltd Mr Colin Henry Naylor & Mrs Anne Naylor Mrs Catherine McDermott Lujeta Pty Ltd Rivermore Pty Ltd Mad Fish Management Pty Ltd Mambat Pty Ltd Mr Trevor James Shard & Ms Lidia Lee Merzel Mr Wayne Daryl King & Mr Craig Alan King Ms Katherine Griffin Mr Steven John O’Bree Nutsville Pty Ltd AWD Consultants Pty Ltd Phillip Mcaulay Superannuation Fund Pty Ltd Mrs Karrina Mitchell Mr Kevin Philip Wilkie Number of shares 18,469,272 5,872,431 4,042,889 3,995,642 3,219,713 2,450,963 2,287,770 2,100,000 1,464,747 1,345,000 1,330,770 1,060,000 1,030,499 1,010,000 1,000,000 1,000,000 950,000 941,153 900,000 894,000 55,364,849 % Issued capital 19.9 6.3 4.4 4.3 3.5 2.6 2.5 2.3 1.6 1.5 1.4 1.1 1.1 1.1 1.1 1.1 1.0 1.0 1.0 1.0 59.8 56 Navarre Minerals Limited ABN 66 125 140 105 ADDITIONAL SHAREHOLDER INFORMATION 4. Substantial Shareholders The substantial holders were as follows: Shareholder Crocodile Gold Australia Pty Ltd Mr Geoffrey McDermott (including New Chum Holdings Pty Ltd & others) Mr Kevin John Wilson No of shares 18,469,272 6,409,180 5,872,431 % Issued Capital 19.9 6.9 6.3 5. Voting Rights At a general meeting of shareholders: (i) (ii) On a show of hands, each person who is a member or sole proxy has one vote. On a poll, each shareholder is entitled to one vote for each fully paid share. TENEMENT INFORMATION (as at 8 September 2015) Project Bendigo North Tandarra2 Landsborough Fault Kingston Western Victoria Copper Project Black Range Stavely Cherrypool Glenlyle Stawell Corridor Ararat Tatyoon Tenement Details1 Group Interest EL 4897 EL 5280 EL 4590 EL 5425 EL 5426 EL 5497 EL 5476 EL 5480 100% 100% 100% 100% 100% 100% 100% 100% Notes 1 EL = Exploration Licence 2 Catalyst Metals Ltd is entitled to earn a 51% interest under a farm-out agreement with Navarre. In addition to its ownership of the Tandarra licence in the Bendigo North area, Navarre is entitled to a 1% royalty on Catalyst’s share of proceeds from future production from such area covered by exploration licences EL 5266 (Raydarra) and EL 5533 (Sebastian) as was formerly covered by the exploration licences that were subject to Navarre’s farm-in agreements with Castlemaine Gold Ltd (current exploration licence EL 5266 and expired exploration licences EL 4536 and EL 4974). 57 

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